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Twitter Investor Sues Elon Musk Over Stock Manipulation

Twitter Investor Sues Elon Musk Over Stock Manipulation
Source: BBC

Elon Musk and Twitter are being sued by a Twitter investor over the billionaire’s $44 billion (£34.9 billion) purchase for the firm.

He is accused of breaking California corporation regulations in a variety of ways, according to the lawsuit.

It accuses Musk of “wrongful behavior,” claiming that his “false claims and market manipulation have generated ‘chaos’ in Twitter’s San Francisco headquarters.”

Mr Musk’s $54.20 bid price for Twitter shares is roughly 27% cheaper.

Investor William Heresniak filed the proposed class action complaint this week in the US District Court for the Northern District of California, claiming to be acting “on behalf of himself and all others similarly situated.”

A class-action lawsuit is one that has been filed or is being defended on behalf of a group of individuals.

Mr Musk allegedly profited financially by delaying the disclosure of his considerable position in Twitter and his intention to join the company’s board of directors, according to the complaint.

It also alleged that other comments from Mr Musk, who has over 95 million followers on Twitter, were “misleading.”

It contained a tweet in which Mr Musk stated his offer for the social media company had been put on hold due to his concerns about the amount of bogus accounts on the network.

According to the complaint, the message on May 13 “constituted an attempt to influence the market for Twitter shares since he knew about the bogus accounts.”

It further claimed that four days later, Mr Musk “doubled down” on his claims, saying on Twitter that the deal “cannot go through.”

The case was launched as Mr Musk “continues to trash the business he wants to buy for $44 billion in an effort to renegotiate the acquisition price,” according to Frank Bottini, one of the attorneys representing the Twitter investors, who told the media on Friday.

Mr Bottini added, “The case we filed in San Francisco aims to hold Musk accountable for his unlawful behavior.”

Analysts suspect that Mr Musk is considering lowering his takeover bid or walking away from the transaction altogether.

He has expressed alarm about the amount of false accounts, or bots, on Twitter on multiple occasions.

A bot is a software program that puts out automated postings on social media sites and is frequently connected with disinformation.

Mr Musk has also intimated that he would try to negotiate a lower price for Twitter than the $44 billion he and the company’s board agreed on in March.

He claimed reaching a deal at a lesser price was “not out of the question” during a technology conference earlier this month.

Earlier this month, a Florida pension fund questioned Mr Musk’s proposal to purchase Twitter, claiming that a transaction could not be reached in the months expected.

Mr Musk was a “interested stakeholder” in Twitter, according to the Orlando Police Pension Fund, since he had established deals with important shareholders, including co-founder Jack Dorsey, before making an offer to acquire the company.

The merger should not be permitted to conclude until 2025, according to the legislation in the US state of Delaware, where Twitter is established.

Although it said that it had been “a beneficial owner of Twitter common shares” at “all relevant times,” the fund did not reveal its holdings in the social media site.