Elon Musk is being accused by Twitter shareholders for engaging in “unlawful conduct” in order to cast doubt on his attempt to buy the social media firm.
According to the lawsuit filed in the US District Court for the Northern District of California, the billionaire Tesla CEO attempted to drive down Twitter’s stock price in order to walk away from the agreement or negotiate a far cheaper price.
Twitter, based in San Francisco, is also named as a defendant in the lawsuit, which seeks class-action status as well as monetary compensation.
Musk proposed to buy Twitter for $44 billion (£34,789,348,000) last month, but the transaction fell through after the firm failed to disclose information on how many of its accounts are spam or bots.
Musk waived due diligence for his “take it or leave it” offer to buy Twitter, according to the lawsuit. That means he gave up his right to inspect the company’s confidential financial records.
Furthermore, the issue of Twitter bots and fraudulent accounts is not new.
Last year, the business agreed to pay $809.5 million to settle charges that overstated its growth rate and monthly user numbers.
For years, Twitter has disclosed its bot estimates to the Securities and Exchange Commission, while simultaneously warning that the estimate could be too low.
Musk has been selling Tesla stock to help fund the acquisition, and the electric carmaker’s stock has lost about a third of its value since the deal was announced on April 25th.
The Twitter shareholders’ lawsuit claims Musk has been disparaging Twitter in response to the stock’s decline, violating both the non-disparagement and non-disclosure sections of his contract with the business.
“In doing so, Musk hoped to drive down Twitter’s stock price and then use that as a pretext to attempt to renegotiate the buyout,” according to the lawsuit.