Twitter Shareholders File Lawsuit Against Elon Musk For Undermining Company's Stock

On May 17, Elon Musk said that his Twitter takeover deal wasn't going to "move forward" until Twitter's CEO Parag Agrawal proved that the platform had less than 5% of fake and spam accounts.

At the same time, Elon Musk claimed that of all accounts of Twitter, spam and fake profiles could account for 20%, "4 times higher what Twitter claims."

20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher.

My offer was based on Twitter¡¯s SEC filings being accurate.

Yesterday, Twitter¡¯s CEO publicly refused to show proof of <5%.

This deal cannot move forward until he does.

¡ª Elon Musk (@elonmusk) May 17, 2022

While Musk plays hardball, a group of shareholders are no longer taking it easy. This group of shareholders has now filed a lawsuit against SpaceX and Tesla founder Elon Musk in a federal district court in San Francisco.

Reuters

What could this lawsuit mean for Twitter-Musk deal?

The lawsuit alleges that Elon Musk has actively manipulated Twitter's stocks to make personal gains. The lawsuit alleges that after signing the purchase agreement with Twitter's board on April 25, "Musk proceeded to make statements, send tweets, and engage in conduct designed to create doubt about the deal and drive Twitter¡¯s stock down substantially in order to create leverage that Musk hoped to use to either back out of the purchase or re-negotiate the buyout price."

Reuters

Also read: Elon Musk Says $44 Billion Deal To Purchase Twitter Is Temporarily On Hold

Referring to this behaviour as "illegal," the complaint added that Musk was in "violation of the California Corporations Code." While the lawsuit was initiated by a small group of shareholders, if any damages are given, it would be distributed among anyone holding Twitter's stock.

Reuters

The deal between Elon Musk and Twitter was supposed to close at $54.20 per share as was agreed. But after Elon Musk's back-and-forth, Twitter shares have been dealing below $40, pushing the entire deal into the realm of uncertainty. The complaint hopes to avail injunctive relief by the court. This could potentially force Elon Musk to move forward with the deal on the originally discussed price.

Also read: Elon Musk's $44 Billion Deal To Buy Twitter Could Be Repriced At A Lower Rate

What do you think - is Elon Musk going to end up as CEO of Twitter or nah? Let us know in the comments below. For more in the world of technology and science, keep reading Indiatimes.com.

References

Brandom, R. (2022, May 26). Twitter shareholder sues Elon Musk for tanking the company¡¯s stock. The Verge.