Shareholders sue Elon Musk and Twitter
Twitter shareholders are suing the CEO of Tesla and SpaceX and the social networking platform itself over a controversial acquisition that sent the company’s stock price fluctuating.
Since billionaire Elon Musk offered to buy all of Twitter, the social networking platform’s stock has fallen more than 12%, while Tesla stock has plunged more than 40%.
In a class action lawsuit filed in the Northern District Court on May 25, Twitter shareholders accused Musk of violating several provisions of California’s corporate law and of seeking to manipulate the market.
One of the violations is that Musk has benefited financially by delaying the disclosure of the number of shares he owns in “Blue Bird” according to regulations and concealing his plan to become a board member of this social network. at the beginning of April.
The lawsuit also argues that Musk purchased Twitter shares based on insider information the company obtained after speaking privately with board members and executives, including former CEO Jack Dorsey, a friend of the company. longtime for 50-year-old billionaire and Silver Lake CEO, Egon Durban – Twitter board member who owned the company that invested in Solar City before Tesla bought it.
Dorsey officially stepped down from Twitter’s board of directors on May 25, while shareholders unanimously voted not to re-appoint Durban.
Shareholders also accused Musk of violating California regulations by creating doubts about his ability to close the deal.
Earlier in May, Musk said he was pausing the Twitter acquisition to learn more about inauthentic activities on the platform, including information about fake and automated accounts (bots).
The complaint alleges that Musk’s push into the auto-accounts issue is part of a bargaining scheme aimed at forcing prices or conspiring to cancel the deal.
“Musk has repeatedly made statements, sent tweets, and engaged in conduct that is believed to cast doubt on the deal, causing Twitter’s share price to drop significantly in order to create the advantage he hopes to have. can be used to withdraw from the deal or renegotiate the repurchase price. Shareholders believe that Musk is trying to force Twitter’s price to be $11 billion below its original asking price.
Under California corporate law, companies must exclude board members from voting rights in the event they engage in misconduct in connection with, or are implicated in, proposals.
Twitter and Musk both declined to comment on the incident.
Vinh Ngo (According to CNBC)
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