Elon Musk accused of covert Twitter stock acquisition before takeover
What's the story
Elon Musk is facing a lawsuit accusing him of secretly acquiring a multibillion-dollar stake in Twitter in early 2022 before eventually acquiring it.
The claimant, an Oklahoma public pension fund, alleges that Musk's delayed disclosure of owning more than 5% of Twitter artificially suppressed its share price.
The lawsuit further claims that Musk was able to acquire over 9% of Twitter without causing a significant stock price increase.
Twitter's share price surge only occurred once Musk's ownership stake became public.
Market manipulation
A Morgan Stanley banker helped Musk evade market notice
Musk supposedly partnered with a Morgan Stanley banker who advised him on how to discreetly avoid alerting the broader market, as per the shareholder lawsuit.
Musk has countered all allegations, arguing that the lawsuit lacks legal basis and is merely an attempt to "harness the spectacle" surrounding his $44 billion acquisition of Twitter, which was later rebranded as X.
Despite his objections, a judge ruled in September that some claims in the case could proceed.
Ongoing investigation
SEC investigates Musk's Twitter stock purchases
The US Securities and Exchange Commission (SEC) is currently investigating Musk's stock purchases.
The lawsuit also alleges that Musk acquired a multibillion-dollar stake in Twitter without the company's knowledge and quickly agreed to join Twitter's board after publicizing his investment.
In April 2022, Musk attempted to buy Twitter outright. Despite initially trying to back out of the purchase, he was sued by Twitter and ultimately completed the acquisition in October 2022.
Acquisition saga
Musk has used Morgan Stanley for various business efforts
Musk has frequently used Morgan Stanley for his business ventures over the years, with Michael Grimes, a managing director at Morgan Stanley, playing a significant role in Musk's deal with Twitter.
The lawsuit also claims Morgan Stanley earned nearly $1.5 million in commissions for executing Musk's "secret Twitter stock acquisition scheme."
The case is filed as Oklahoma Firefighters Pension and Retirement System vs Musk, 22-cv-03026, US District Court, Southern District of New York (Manhattan).