Elon Musk And Twitter Both Sued By Shareholders Over 'Chaotic Deal'

Tesla Inc TSLA CEO Elon Musk and Twitter Inc TWTR are being sued by the microblogging company’s shareholders over an ongoing chaotic $44 billion take-private deal, CNBC reported on Thursday, citing a lawsuit.

What Happened: Twitter shareholders allege that the billionaire entrepreneur violated California corporate laws on several fronts, and in doing so engaged in market manipulation, as per a class-action lawsuit filed on Wednesday.

The lawsuit lists another potential violation, alleging that Musk benefited financially by late disclosures about his stake in Twitter and by temporarily concealing his plan in early April to become a board member at the microblogging site.  

See Also: Elon Musk Sued By Former Twitter Shareholders Over Late Stake Disclosure: Report

The lawsuit alleges Musk had insider information based on private conversations with board members and executives, including former CEO Jack Dorsey and Silver Lake co-CEO Egon Durban, a Twitter board member whose firm had previously invested in SolarCity before Tesla acquired it.

Why It Matters: Tesla and SpaceX CEO had on April 4 revealed a 9.1% stake in Twitter and 10 days later proposed a $44 billion buyout bid. The billionaire entrepreneur sold some of his Tesla shares to finance the deal that he says is currently on hold to establish the exact nature of fake accounts on the social media site.

Previously, in another lawsuit, former Twitter shareholders had sued Musk for failing to reveal by March 24 that he had invested in the microblogging site. Former shareholders claim they missed out on the recent rise in Twitter’s stock because Musk’s disclosure came in too late. 

See Also: Expect More Musk-Related Fireworks At Twitter Shareholder Meeting This Week: Wedbush Analyst

Price Action: Twitter closed 6.35% higher at $39.5 on Thursday.