Musk asks judge to dismiss shareholder lawsuit, argues Twitter delay in disclosure is a ‘mistake’

Elon Musk asked a New York federal judge to dismiss a lawsuit filed by shareholders of Twitter, the platform now known as X, arguing that the delay in disclosing his stake in the social media company was an “error.”

The billionaire was sued by Twitter shareholders in April 2022, after revealing that he had acquired a 9.2% stake in the company.

Under federal securities laws, Musk should have disclosed his Twitter holdings within 10 days of exceeding 5% of the company’s shares. However, he filed a lawsuit with the Securities and Exchange Commission (SEC) about three weeks after exceeding that threshold in March 2022.

The shareholders allege that Musk and his wealth manager “planned to violate Musk’s disclosure obligations so they could secretly build a huge position in Twitter at artificially low prices, while deceiving investors.”

However, Musk’s lawyers argued in a filing Wednesday that the delay was a simple error and that the shareholders’ class action lawsuit should be dismissed.

“Plaintiff’s case centers on a single issue: whether Defendants’ alleged delay in filing a Rule 13 disclosure was the result of an error – even a negligent error – or, instead, part of a scheme to defraud investors for a maximum of seven trading days,” the lawsuit says.

“All indications – including those contained in the procedural documents – point to an error”, he continues.

They argued that Musk and his wealth manager did not understand federal securities rules, believing they would require him to disclose his Twitter holdings later in the year. After learning of the error, Musk filed the order in the next trading session, according to Wednesday’s filing.

“Such rapid and corrective disclosure – within seven trading days of the supposed deadline – is not the material of a fraudulent scheme to manipulate the market,” the document says.

Musk also faced SEC scrutiny over his purchase of Twitter shares in April 2022. The billionaire lost a months-long legal battle in May to avoid another testimony in the agency’s investigation.

This story originally appeared on thehill.com read the full story