In a major legal victory for tech billionaire Elon Musk, a class-action lawsuit accusing him of cheating Twitter shareholders has been dismissed by a U.S. District Judge in San Francisco.
The lawsuit alleged that Musk manipulated the system during the acquisition of the social media giant. However, the judge ruled that the plaintiff lacked standing to sue and found no evidence to support the claims of harm caused by Musk’s actions, Reuters reported on Tuesday.
The lawsuit, filed by William Heresniak, claimed that Musk’s delayed disclosure of a 9.2 percent stake in Twitter allowed him to purchase additional shares at a lesser price before the buyout was announced. It also alleged that the deal’s closing took place 1 1/2 months later than planned, causing harm to shareholders.
However, U.S. District Judge Charles Breyer dismissed the case, stating that Heresniak lacked standing to sue because he focused on the “wrongs associated with” Musk’s buyout rather than the fairness of the buyout itself, reported Reuters. The judge emphasised that the plaintiff did not demonstrate any specific harm resulting from Musk’s belated disclosure or the delayed closing.
Furthermore, the judge found no proof to support the claim that Musk helped two friends on Twitter’s board, Jack Dorsey and Egon Durban, breach their fiduciary duties by favoring their own and Musk’s interests. The decision to allow Dorsey to roll over his approximately $1 billion worth of Twitter shares into an equity stake in the new company was determined to be a legitimate reduction in Musk’s payment at closing and not an improper diversion of funds from other shareholders.
Musk, who was the world’s richest man for the most part of 2022, bought Twitter for $44 billion in April last year. After Musk’s takeover, the then publicly-traded firm became private. Notably, after Musk completed the takeover in October last year, Twitter has been on a makeover spree.
While the lawsuit against Musk has been dismissed, Twitter’s troubles are far from over.
The microblogging platform continues to face challenges in maintaining ad revenue. Advertisers have expressed concerns about their ads being associated with hate speech or inappropriate content due to the platform’s relaxed content rules.
Moreover, Musk’s recent appointment of former NBCUniversal advertising chief Linda Yaccarino as Twitter’s new CEO adds an intriguing twist to the ongoing saga.
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