Twitter investors have sued Mr. Elon Musk for allegedly driving down the social network’s share price in an effort to cut the cost of his $44bn (£35bn) takeover.
According to a lawsuit filed in California, the Tesla chief has illegally attempted to “mitigate personal [financial] risks to himself by engaging in unlawful conduct that moved the price of Twitter’s stock down.”
William Heresniak filed the lawsuit on behalf of himself and other Twitter shareholders against the Tesla billionaire and the social media company.
The lawsuit claims Mr Musk is making false statements and engaging in “market manipulation” to negotiate a cut-price deal.
Twitter’s shares have fallen heavily in recent weeks, despite Mr Musk agreeing to buy the company for $54.20 a share, after he said he had put the deal on hold and suggested he should get a discount due to the number of fake accounts on the service.
They are currently trading at $39.52, 27pc below Mr Musk’s offer price, with the company’s market value $14bn below the offer price.
The lawsuit states further: “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,”
Heresniak is seeking to have the lawsuit designated as a class action, allowing other Twitter shareholders to join it, and for Mr Musk to compensate the company’s shareholders for the declining value of their investment.
The lawsuit demands that Twitter “investigate Musk’s conduct and take appropriate action”.
