Twitter shareholders sued Musk and Twitter, claiming they manipulated the stock market to try to lower the acquisition price!

Twitter shareholders are suing Musk and Twitter for failing to comply with regulatory disclosures and for using their ongoing chaotic acquisitions to manipulate the stock price, causing wild fluctuations in Twitter's stock price. In a proposed class action lawsuit filed by Twitter shareholders on May 25, Twitter shareholders claim that Musk violated California corporate law in multiple ways and was suspected of market manipulation. The case is currently being litigated in the Northern District Court of California, and shareholders are seeking a jury trial.

Musk, CEO of Tesla and SpaceX, bought a large number of Twitter shares on April 4 and offered to buy Twitter for $44 billion, or $54.20 per share, 10 days later. Musk has sold and pledged most of his Tesla shares as collateral for the loan to finance the acquisition.

Twitter's stock price has fallen more than 12% since Musk made his bid, while Tesla's stock price has fallen about 28%. Tesla's stock price has fallen more than 40% since Musk first bought Twitter shares as of the close of trading on May 25.

In one potential violation, Twitter shareholders claim Musk benefited financially by delaying making public his purchase of Twitter shares and by temporarily concealing his plans to become a member of the social network's board of directors in early April.

The lawsuit alleges that Musk acquired insider information about Twitter through private conversations with board members and senior executives and snapped up Twitter shares, which is suspected of market manipulation. The proposed lawsuit also alleges that Musk violated California law by "going back on his word" after signing the contract to acquire Twitter.

Earlier this month, Musk announced that he was "putting on hold" his acquisition of Twitter to learn more about fake accounts on the platform.

The shareholder complaint added that Musk's complaints about "bots" were part of an effort to increase negotiating leverage or terminate the deal. Musk's alleged actions to cause Twitter's stock price to plummet would have resulted in a reduction of up to 25% in the purchase price, or $11 billion.

Under California law, companies in the state must exclude board members from voting on proposals if they engage in some kind of misconduct related to those proposals, the people said. Twitter declined to comment. Musk did not respond to a request for comment.

Editor ✎Estella/

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