CEO of Twitter/X Elon Musk may be in some very serious legal trouble. A federal judge on Tuesday said former Twitter investors, who accused Elon Musk of defrauding them by waiting too long to disclose his initial investment in the social media company, may pursue their case as a class action.
As per Reuters, the decision by U.S. District Judge Andrew Carter in Manhattan exposes the world’s richest person to potentially greater damages than if investors were forced to sue individually.
The case stems from Musk’s accumulation of more than 5 % of Twitter’s shares in 2022, which, under U.S. Securities and Exchange Commission (SEC) rules, should have been publicly disclosed within 10 days of crossing that threshold. Instead, Musk waited an additional 11 days before revealing that he held a 9.2 % stake, during which period he continued to add to his holdings.
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Opposing investors allege this delay allowed Musk to purchase shares at lower prices before the stock jumped on public disclosure, harming other shareholders and supposedly saving him hundreds of millions of dollars in the process.
The investors, led by the Oklahoma Firefighters Pension and Retirement System, argue that Musk’s silence and related social media statements misled the market. The judge’s decision to allow a class action means the case can proceed on behalf of all similarly affected shareholders, rather than only the original plaintiffs.
As per Reuters, investors said they relied on two March 26, 2022, tweets, where Musk said he was “giving serious thought” to creating a Twitter rival, and said “Haha that would be sickkk” after someone suggested he buy Twitter and change its bird logo to a doge image.
This lawsuit highlights the broader pressures faced by high-profile business leaders when personal investments intersect with public influence. Beyond financial stakes, it underscores how decisions made in one context can have ripple effects across multiple ventures, drawing scrutiny from regulators, investors, and the public simultaneously. For Musk, this case may intensify the need to carefully navigate public statements and social media activity, as even informal commentary can be interpreted in ways that carry legal consequences.
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How Musk responds could shape perceptions of his judgment and trustworthiness, affecting relationships with partners, shareholders, and regulators. Additionally, the class-action status amplifies the potential collective impact of legal claims, creating an environment where past actions are examined in unprecedented detail.
As per Reuters, the case is separate from a lawsuit in San Francisco federal court, where a jury found Musk liable on March 20 for trying to drive the takeover price down by questioning whether Twitter was overrun by fake and spam accounts, or bots.