Elon Musk faces class action over delayed Twitter stake disclosure

A US judge has ruled that Elon Musk must face a class action lawsuit brought by former investors in Twitter (now X), who accuse him of delaying disclosure of his stake in the platform.

U.S. District Judge Andrew Carter said Tuesday that investors can pursue their claims collectively, a decision that could significantly increase potential damages.

The lawsuit alleges Musk violated US Securities and Exchange Commission rules by missing a March 24, 2022 deadline to disclose that he had acquired a 5% stake in Twitter.

Instead, Musk waited 11 more days before revealing a 9.2% stake, according to the complaint.

Investors, led by the Oklahoma Firefighters Pension and Retirement System, claim the delay allowed Musk to buy shares at lower prices, saving more than $200 million while other shareholders sold at depressed values.

They also cited Musk’s March 2022 tweets suggesting he might build a rival platform, arguing those statements misled the market.

Musk has denied wrongdoing and argued investors cannot prove reliance on his alleged misstatements.

However, the judge said Musk failed to rebut the presumption that his actions impacted Twitter’s share price and investor decisions.

He also ruled that challenges in calculating damages do not prevent class certification.

The case is separate from another lawsuit in California where Musk was previously found liable over statements made during his $44 billion acquisition of Twitter, now renamed X. Musk is expected to appeal the latest ruling.