An investor in Twitter is suing Elon Musk, the social media platform, and Elon Musk for their handling of the $44bn (PS34.9bn), bid for the company.
He is accused of violating California corporate law in several ways.
It claims that Tesla boss, Tesla CEO, is guilty of “wrongful conduct”, as his “false statement and market manipulation have caused chaos at Twitter’s headquarters here in San Francisco”.
Twitter shares are approximately 27% less than Mr Musk’s $54.20 price for an offer.
William Heresniak, an investor, filed the proposed class action lawsuit at the US District Court for California’s Northern District. He claimed he was representing himself and others who are similarly situated.
A class-action lawsuit is one that is filed on behalf of a group.
According to the lawsuit, Musk was accused of profiting financially from delaying disclosure of his large stake in Twitter and his plans to join the board of the company.
It claimed that Mr Musk’s tweets, which have been shared by more than 95 million followers, were misleading.
It also included a post by Musk, in which he said that his takeover bid for social media company was being held up because he doubted the number of fake accounts.
According to the lawsuit, the tweet of 13 May “constituted an attempt to manipulate Twitter shares as he knew the fake accounts.”
It stated that Musk had “doubled down” on his claims four days later by declaring on Twitter that the deal “cannot proceed”.
Frank Bottini (one of the lawyers representing the Twitter investor) said Friday that the lawsuit was filed because Musk “continues disparage the company he wants” to purchase for $44bn to renegotiate his purchase price.
Mr Bottini stated that Musk is being held responsible for the illegal conduct of his complaint in San Francisco.
Tesla and Mr Musk’s lawyers did not respond to a BBC request on Friday for comment.
Twitter refused to comment on BBC inquiries.
Analysts speculate that Musk might be seeking ways to reduce his takeover offer or walk out of the deal.
He tweeted multiple times about his concern over fake accounts or bots on Twitter.
Bots are software programs that automatically send out posts to social media. They are often linked with misinformation.
Musk also suggested that he might pay less for Twitter than $44 billion that was agreed to with the board in March.
He stated that a deal for a lower price is possible at a technology conference earlier in the month.
A Florida pension fund challenged Musk’s plan to buy Twitter earlier this month. It claimed that a deal could not be reached in the timeframe planned.
According to the Orlando Police Pension Fund, Musk is an “interested shareholder” of Twitter because he has made agreements with key shareholders including Jack Dorsey before offering to buy it.
It cited the Delaware law, where Twitter is incorporated, and said that the deal should not be closed before 2025.
Although the fund didn’t disclose its stake in social media platform, it stated that it was “a beneficial owner” of Twitter common stock at “all relevant time”.
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