Elon Musk faces lawsuit for ‘secret’ Twitter stock purchases

Elon Musk faces lawsuit for ‘secret’ Twitter stock purchases

A lawsuit alleging that Morgan Stanley assisted Elon Musk in secretly acquiring a stake of over 9% ownership in Twitter (now X) has been filed as an amended suit in Manhattan, brought by the Oklahoma Firefighters Pension and Retirement System.

The lawsuit alleges that a Morgan Stanley banker advised the Tesla owner on how to continue to acquire stocks in Twitter without alerting the wider market, reports Bloomberg.

According to the suit, Musk’s failure to disclose his ownership of over 5% of the platform artificially kept share prices low and allowed Musk to acquire over 9% of Twitter without a market response. The stock price eventually saw a major hike when the degree of Musk’s ownership became public.

There was a March 24 deadline to disclose his ownership of over 5% of the social media site, which he failed to meet, instead reporting his over 9% ownership on April 4. Share prices rose by 27% on April 4.

Elon Musk’s defense

Elon Musk argued last year that the suit is frivolous and should be thrown out, suggesting that it is simply designed to “harness the spectacle” of his $4 billion dollar purchase of the site. However, in September, a judge ruled that an amended suit could proceed.

Msuk has worked with Morgan Stanley on several ventures previously and the suit alleges that they earned nearly $1.5 million in commissions when they executed the billionaire’s “secret Twitter stock acquisition scheme.”

The unnamed Morgan Stanley banker worked directly with Musk and his business manager Jared Birchall (also CEO of Musk-owned Neuralink) to obfuscate the stock acquisitions Musk was undertaking. The suit cites the banker providing updates on “trading strategies to avoid public detection” and “‘money saved’ by hiding these trades from the market”.

Musk is under scrutiny over the purchase from multiple sources and has been ordered to answer questions from a federal judge concerning his purchase of Twitter after previously refusing to attend an interview.

Featured image credit: Midjourney

The post “Elon Musk faces lawsuit for ‘secret’ Twitter stock purchases” by Ali Rees was published on 05/30/2024 by readwrite.com