Tesla billionaire Elon Musk has faced a recent setback after a federal judge in Manhattan said investors are allowed to proceed with their lawsuit against him. According to the lawsuit, the investors claimed that Musk manipulated the price of the company’s stock before he purchased it in 2022.
According to a report, the investors are claiming securities fraud in the build up to the purchase, noting that Musk failed to reveal how much twitter stock he had purchased, posted misleading statements about the future of the platform, and used a secret trading strategy to build his stake. The United states District Judge Andrew Carter ruled that most of the tweets that Musk put out at the time support the investors claims.
Elon Musk under fire after legal verdict
One of the series of tweets that he put out saw Musk polling Twitter users over the number of bot or spam accounts on the platform. The judge mentioned that while some of his tweets do not translate to fraud, they certainly misled the market. Musk’s attorney had tried to get the judge to dismiss the case, calling it illegal and baseless and accusing the investors of using public attention around the purchase of the platform for $44 billion at the time.
The SEC had been investigating Musk over his potential decision to gather Twitter shares at a discount by withholding the full extent of his ownership on time. After Musk disclosed his position, the price of the stock jumped by 27%. While regulators claimed that he possessed material nonpublic information, the agency has not officially accused him of insider trading.
Recently, five SEC commissioners voted on whether to sue Elon Musk. While four were in support of the move, only Commissioner Mark Uyeda voted against the move. However, according to Musks lawyer Alex Shapiro, his client has not committed any wrongdoing and the SEC is accusing him of committing ‘ticky tak’ violations.