From Yahoo Finance: 2025-03-28 17:33:00

A U.S. judge rejected Elon Musk’s bid to dismiss a lawsuit accusing him of defrauding former Twitter shareholders by waiting too long to disclose his investment. The lawsuit claims Musk intended to commit fraud through misleading tweets and a strategy to silently build his Twitter stake. The SEC is also suing Musk over the late disclosure.

Plaintiffs, including the Oklahoma Firefighters Pension and Retirement System, allege Musk ignored an SEC deadline to reveal his Twitter shares purchase, waiting 11 days before disclosing his 9.2% stake. They claim this saved Musk over $200 million and harmed shareholders who sold at artificially low prices. Musk bought all of Twitter for $44 billion in October 2022.

U.S. District Judge Andrew Carter said Musk’s disclosure of the 9.2% stake could be misleading, suggesting a passive investment. Shareholders can also sue over Musk’s tweets hinting at building a Twitter rival and changing the logo. Musk’s lawyers argued the tweets cast doubt on fraudulent intent, but the judge found the plaintiffs’ argument compelling.

Twitter shares surged 27% after Musk revealed his 9.2% stake. The case, Oklahoma Firefighters Pension and Retirement System v. Musk et al, is ongoing in the U.S. District Court, Southern District of New York. Musk’s lawyers have not commented on the judge’s decision.

Read more: Elon Musk must face fraud lawsuit over disclosure of Twitter stake