Elon Musk Must Face Class Action Over Late Disclosure of Twitter Stake

A federal judge just ruled that former Twitter investors can pursue a class action lawsuit against Elon Musk for allegedly waiting too long to disclose how much of the company he owned.

U.S. District Judge Andrew Carter in Manhattan certified the case as a class action, meaning investors who sold Twitter shares during a key 11-day window in 2022 can now sue Musk as a group — which opens the door to significantly larger damages.

What Happened

Under SEC rules, anyone who acquires more than 5% of a company's shares has to publicly disclose it within 10 days. According to the lawsuit, Musk hit the 5% threshold and blew past his March 24, 2022 disclosure deadline. He waited 11 more days before revealing he actually held a 9.2% stake.

The lawsuit, led by the Oklahoma Firefighters Pension and Retirement System, alleges that Musk's silence allowed him to keep buying shares at lower prices while investors sold their stock without knowing the world's richest person was loading up. The investors claim Musk saved more than $200 million during that period, while they sold at prices that didn't reflect the real demand for Twitter shares.

Musk's legal team argued that investors couldn't prove they relied on his alleged fraud. The judge disagreed, ruling that Musk didn't overcome the presumption that his silence affected Twitter's share price.

This Is the Second Major Twitter Lawsuit Musk Lost This Month

Just 11 days before this ruling, on March 20, a jury in San Francisco found Musk liable in a separate class action — Pampena v. Musk — for misleading Twitter investors during the $44 billion acquisition by publicly questioning whether the platform was overrun with bots. Damages in that case could reach up to $2.6 billion, according to the plaintiffs' attorneys.

The SEC has also sued Musk separately over the same late disclosure of his 5% stake. Both sides confirmed on March 17 that settlement talks are ongoing.

What This Means for You

There is no settlement in this case yet, and no claims process has been set up. If you sold Twitter shares between late March and early April 2022, this case could eventually affect you.

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