Elon Musk is hoping that the U.S. federal court will dismiss a lawsuit filed by former Twitter shareholders who claim that he did not disclose his significant stake in the social media company in early 2022. Musk argues that all signs indicate that his delay was a misunderstanding.
According to Reuters, in documents filed with the Manhattan federal court on Wednesday, Musk stated that he believes the allegations that he attempted to deceive unaware shareholders into selling their stocks by not disclosing his 9.2% ownership in Twitter, now rebranded as X, are not credible and caused them to miss out on substantial gains.
Musk stated in the documents that he had originally planned to disclose his stake in Twitter at the end of 2022 but immediately revealed the information upon realizing his misunderstanding of the U.S. Securities and Exchange Commission’s disclosure rules.
“This was not a fraudulent scheme. All indications – including the content of the lawsuit – suggest this was an oversight,” Musk said.
In a lawsuit brought against Musk and others by the Oklahoma Firefighters Pension and Retirement System in Manhattan federal court, Musk and his wealth manager Jared Birchall are alleged to have known that SEC rules required Musk to disclose he had purchased 5% of Twitter shares by March 24, 2022, but delayed the disclosure for an additional 11 days.
Currently, the SEC is investigating Musk’s delayed disclosure of his ownership before taking over Twitter. If the SEC formally files a fraud complaint against Musk, regulatory authorities may seek a court order to prohibit Musk from serving as an executive or director of a publicly traded company in the U.S.
According to a report by The Wall Street Journal in May 2022, Musk saved over $143 million by delaying the disclosure of his ownership.
Musk also denied shareholders’ claims that an unnamed Morgan Stanley banker helped devise a trading strategy to acquire Twitter shares in large quantities without attracting widespread market attention.
After Musk revealed his 9.2% stake on April 4, 2022, Twitter’s stock price surged by 27%. Later in October of the same year, he acquired Twitter, headquartered in San Francisco, for $44 billion.
The lawyer for the Oklahoma Firefighters Pension and Retirement System did not immediately respond to Reuters’ request for comment on Friday.
In September of last year, U.S. District Judge Andrew Carter refused to dismiss a previous version of the lawsuit, finding evidence that Musk was aware of SEC disclosure rules and discussed this while under oath.
Regulatory authorities had previously requested a court order against Musk in a separate lawsuit.
In August 2018, Musk tweeted about potentially taking Tesla private with secured funding, a deal that did not materialize, leading investors to sue him for dissatisfaction.
Authorities, in suing Musk, sought to prohibit him from serving as an officer or director of a public company. Musk avoided the ban by settling with the SEC, agreeing to step down as chairman of Tesla and paying a $20 million fine while continuing as CEO.
According to Forbes data as of July 1, Musk remains the world’s richest individual, overseeing various companies including the electric car brand Tesla and SpaceX.