New Delhi: Elon Musk is being accused of secretly buying a large amount of Twitter stock in early 2022 with help from a Morgan Stanley banker. A shareholder lawsuit says this involved market manipulation and delaying the disclosure of his ownership.
An Oklahoma public pension fund claims Musk, with advice from an unidentified banker at Morgan Stanley, managed to avoid alerting the market while buying a major stake in Twitter. This banker gave Musk and his business manager, Jared Birchall, regular updates on trading strategies to keep the purchases hidden, showing how much money they saved by doing so.
The lawsuit says Musk delayed announcing that he owned more than 5% of Twitter, which kept the stock price low. This allowed him to buy over 9% of the company without causing a big increase in the stock price. The price only went up after his stake was revealed.
Musk argued last year that the lawsuit should be dismissed, saying it was just trying to exploit the attention around him and his $44 billion purchase of Twitter, which is now called X. However, a judge decided in September that some of the claims could go forward. The U.S. Securities and Exchange Commission is also looking into Musk’s stock purchases.
Neither Musk, Morgan Stanley, nor Birchall who is also the CEO of Musk’s company Neuralink—immediately responded to requests for comment.
Musk initially agreed to join Twitter’s board after his investment became public, but by April 2022, he decided to buy the company instead. He later tried to back out of the deal but was sued by Twitter and ended up completing the purchase in October 2022.
The lawsuit also claims that Morgan Stanley earned almost $1.5 million in commissions for helping Musk with his secret stock purchases. Michael Grimes, a managing director at Morgan Stanley, played a key role in Musk’s Twitter deal.
The case is called Oklahoma Firefighters Pension and Retirement System v. Musk, 22-cv-03026, in the U.S. District Court for the Southern District of New York (Manhattan).
