Judge Nixes Shareholder Lawsuit Against Elon Musk Over Twitter Buyout
A federal judge tossed out a lawsuit against Elon Musk brought by a former Twitter shareholder because he challenged way the billionaire bought the platform, not the fairness of the deal itself.
U.S. District Judge Charles Breyer in San Francisco on Monday said that William Heresniak lacked standing to sue because he did not show harm from Musk’s delayed disclosure of a 9.2% stake in Twitter when it was still a public company, nor from the delays that led to the final sale taking place a month and a half later than was planned, Reuters reported.
Heresniak had claimed in the suit, which had sought class action status, that by delaying disclosure of his purchases of Twitter stock, Musk cost him and other shareholders $156 million. It was filed in May 2022, about a month after the company had accepted Musk’s buyout offer. The final sale took place in October.
At least one other suit brought by a former Twitter shareholder also targets Musk over the fact that the CEO of SpaceX and Tesla waited days to declare that he had amassed more than 5% of the company’s shares, the point at which securities laws require disclosure. By not revealing the purchases, the second suit argued, the billionaire mogul was able to artificially supress the price of the stock as he amassed his stake ahead of striking the buyout deal, the complaint said.
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In the Heresniak-led case, the judge also found that there was no proof of allegations that Musk helped two friends then on Twitter’s board — co-founder and former CEO Jack Dorsey and Silver Lake private equity managing partner Egon Durban — breach their fiduciary duties by taking actions that benefited themselves and Musk, according to Reuters.
Reuters said it was unable to reach Heresniak’s attorney after hours for a comment on the case.
An emailed request for comment from Twitter received the company’s standard response since Musk eliminated its communications department shortly after the buyout – an autoreply with a poop emoji.
In a March 3 court filing, Musk’s attorneys called Heresniak’s claims “a disjointed laundry list of – often irrelevant – grievances against Elon Musk,” Reuters said.
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Twitter under Musk has seen advertising revenue plunge 89% as it struggled to keep top brands on the platform.
Earlier this month, Musk named Linda Yaccarino as CEO of Twitter after she stepped down from her post as NBCUniversal’s chairman of global advertising and partnerships. Musk has said he will transtition to the role of executive chairman and chief technology officer, focusing on “product design and new technology.”