Twitter, Inc. 2022

Case Details

Class Period: May 13, 2022 - October 4, 2022
Date Filed: October 10, 2022
Case Number: 3:22cv05937
Jurisdiction: California Northern District Court
icon-casetype Case Type: Securities Case
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Case Summary

The lawsuit charges that Defendant Elon Musk violated Section 10(b) of the Securities Exchange Act of 1934 by issuing false statements about his purchase of Twitter, Inc., including termination notices that falsely claimed that Twitter had breached terms of the merger agreement and that a Material Adverse Event (“MA”) had occurred. On May 13, 2022, Musk tweeted that the merger was “temporarily on hold.” On May 17, 2022, Musk stated that the merger “cannot go forward” and claimed that almost 20% of Twitter accounts were fake. Musk thereafter issued three separate notices terminating the merger between July 8, 2022 and September 9, 2022 which falsely claimed that Twitter had breached terms of the merger agreement by not giving him documents about spam. The complaint alleges that Musk’s statements were false because Musk was not entitled to due diligence and had in fact waived due diligence; Musk was well aware of the problem of bots and spam on Twitter, and there were no legally justifiable reasons for Musk to terminate the Merger. On October 4, 2022, less than two weeks before he was set to go to trial in Delaware over the merger, Musk stated he would proceed with the Twitter buyout at the original $54.20 price, abandoning his prior positions and capitulating to Twitter. The announcement shocked the stock market and caused Twitter’s stock price to increase by 22%. Twitter stock and bondholders who sold their Twitter securities earlier in the year based on Musk’s false statements were damaged by selling at prices artificially depressed by Musk’s false statements.