Judge Rejects Elon Musk Bid to Dismiss Shareholder Fraud Lawsuit

Judge Rejects Elon Musk Bid to Dismiss Shareholder Fraud Lawsuit

Court Ruling on Shareholder Lawsuit

A U.S. federal judge has denied Elon Musk’s request to dismiss a lawsuit accusing him of defrauding former Twitter shareholders. The lawsuit claims Musk deliberately delayed disclosing his investment in Twitter (now X) to gain a financial advantage.

Allegations of Misleading Investment Disclosures

The lawsuit, led by the Oklahoma Firefighters Pension and Retirement System, alleges that Musk failed to meet a regulatory deadline on March 24, 2022, to disclose when his Twitter stake surpassed 5%. Instead, he waited 11 days before revealing a 9.2% stake, allegedly saving himself over $200 million while other shareholders unknowingly sold their shares at lower prices.

Judge’s Findings on Fraudulent Intent

Judge Andrew Carter ruled that shareholders presented a valid argument that Musk’s delayed disclosure and misleading regulatory filings suggested fraudulent intent. The court noted that Musk’s disclosure of the 9.2% stake appeared passive, implying no plans to buy Twitter, which later proved to be untrue.

Tweets Under Scrutiny

The lawsuit also cites Musk’s tweets from March 26, 2022, in which he stated he was “giving serious thought” to creating a Twitter competitor. He also responded to a suggestion to buy Twitter and replace its bird logo with a doge by saying, “Ha ha that would [be] sickkk.” The judge ruled that these tweets could be seen as misleading to investors.

SEC Lawsuit Against Musk

The U.S. Securities and Exchange Commission (SEC) has also filed a lawsuit against Musk over his delayed investment disclosure. Musk has been served with a summons and is required to respond to the case in early April.

Musk’s xAI Acquires X

In a separate development, Musk’s artificial intelligence company, xAI, has acquired the social media platform X (formerly Twitter) for $33 billion in an all-stock deal. This merger could enhance xAI’s access to user data and improve its AI capabilities.

“Judge Rejects Elon Musk Bid to Dismiss Shareholder Fraud Lawsuit” “Judge Rejects Elon Musk Bid to Dismiss Shareholder Fraud Lawsuit”