Judge Allows Twitter Investors' Class Action vs. Musk

In a Manhattan federal court, a judge ruled on Tuesday that former Twitter investors can pursue their fraud lawsuit against Elon Musk as a class action. This pivotal decision exposes the billionaire to potentially greater financial liabilities than if investors had to sue individually.

The investors, led by the Oklahoma Firefighters Pension and Retirement System, contend that Musk violated Securities and Exchange Commission rules. They claim he failed to disclose his initial 5% ownership of Twitter shares by a March 24, 2022 deadline, waiting an additional 11 days to reveal a 9.2% stake.

This delay, investors assert, allowed Musk to save more than $200 million. They argue that during the 11-day period, they sold their Twitter shares at depressed prices, being misled by Musk's silence and his subsequent tweets on March 26, 2022.

Musk's legal team argued that investors could not prove reliance on his alleged fraud. However, the judge stated that Musk did not overcome the presumption that his misrepresentations impacted Twitter's share price and that investors relied on his nondisclosure.

This lawsuit is separate from another case in San Francisco, where a jury recently found Musk liable for attempting to lower the takeover price by questioning the number of bots on the platform. Damages for that case are still to be determined. Additionally, the SEC is pursuing its own case against Musk regarding his disclosure, with settlement talks reportedly ongoing.