Elon Musk ‘broke the law’ while buying Twitter shares

Elon Musk's huge Twitter investment has taken a new twist with the filing of a lawsuit alleging that the billionaire illegally delayed disclosing his stake so he could buy more shares at lower prices.

The complaint in New York federal court accuses Mr Musk of violating a regulatory deadline to reveal he had accumulated a stake of at least 5 per cent.

Instead, according to the complaint, Mr Musk did not disclose his position in Twitter until he had almost doubled his stake to more than 9 per cent.

That strategy, the lawsuit alleges, hurt less wealthy investors who sold shares in the San Francisco company in the nearly two weeks before Mr Musk acknowledged holding a major stake.

Mr Musk's regulatory filings show that he bought a little more than 620,000 shares at $36.83 apiece on January 31 and then continued to accumulate more shares on nearly every single trading day through to April 1.

Mr Musk, best-known as chief executive of electric car maker Tesla, holds 73.1 million Twitter shares, 9.1 per cent of the stock.

The lawsuit alleges that by March 14, Mr Musk's stake in Twitter had reached a 5 per cent threshold that required him to publicly disclose his holdings under US securities law by March 24. Mr Musk did not make the required disclosure until April 4.

That revelation caused Twitter's stock to soar 27 per cent from its April 1 close to nearly $50 by the end of April 4's trading, depriving investors who sold shares before Mr Musk's improperly delayed disclosure the chance to realise significant gains according to the lawsuit filed on behalf of an investor named Marc Bain Rasella.

Mr Musk, meanwhile, was able to continue to buy shares that traded in prices ranging from $37.69 to $40.96.

The lawsuit is seeking to be certified as a class action representing Twitter shareholders who sold shares between March 24 and april 4, a process that could take a year or more.

Jacob Walker, one of the lawyers that filed the lawsuit against Mr Musk, said: "I assume the SEC is well aware of what he did."