On Wednesday night, a fresh complaint was filed on behalf of Twitter shareholders in federal district court in San Francisco, alleging that Tesla CEO Elon Musk has intentionally manipulated the company’s stock for personal advantage.
Musk’s behavior since signing the acquisition agreement with Twitter’s board on April 25th is the subject of the complaint, specifically his recent comment that the deal “cannot move forward” without further information concerning automated accounts on the network.
“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,” the complaint alleges after Musk signed the agreement.
The complaint continues, “As stated above, Musk’s conduct was and continues to be illegal, in violation of the California Corporations Code, and contrary to the contractual obligations he committed to in the arrangement.”
The complaint is a proposed class action filed by some stockholders, but it seeks damages for everyone who owns stock in the corporation.
Twitter has remained silent on the matter
Despite Musk’s strange behavior, there has been no evident move by the Tesla CEO to cancel or renegotiate the contract. The peculiar behavior of Twitter’s shares, which continues to trade significantly below the agreed-upon acquisition price, backs up the complaint’s assertions. Twitter shares were trading below $40 as of press time, indicating widespread market doubt that the deal will close at the agreed-upon $54.20 price.
Notably, the complaint asks the court for injunctive action, which might compel Musk to buy Twitter at the agreed-upon amount.
Uncertainty surrounding Musk’s public pronouncements has already had a significant influence on the buyout proposal, causing Tesla stock to plummet to the point where Musk had to abandon attempts to raise finance through loans secured against his Tesla holdings. Musk told the Securities and Exchange Commission earlier this week that he will provide an extra $6 billion in equity funding to compensate for the loans that have expired.
