A judge dismissed a proposed class-action lawsuit against Elon Musk that claimed he cheated Twitter shareholders several times last year in the course of buying the social media company for $44 billion (roughly Rs. 3,61,687 crore).
In a decision on Monday, US District Judge Charles Breyer in San Francisco said plaintiff William Heresniak lacked standing to sue because he challenged “wrongs associated with” Musk’s buyout, not the fairness of the buyout itself.
Breyer said Heresniak did not show harm from Musk’s belated disclosure of a 9.2 percent Twitter stake, which the suit said let him buy more shares at lower prices before the buyout was announced, or from the closing’s taking place 1 1/2 months later than planned.
The judge also found no proof that Musk helped two friends then on Twitter’s board, co-founder Jack Dorsey and Silver Lake private equity firm managing partner Egon Durban, breach their fiduciary duties by favoring their own and Musk’s interests.
Breyer said letting Dorsey roll over his approximately $1 billion (roughly Rs. 8,210 crore) of Twitter shares into an equity stake in the new company merely reduced how much Musk had to pay at closing, and did not “improperly divert” money from other shareholders.
Heresniak’s lawyers did not immediately respond to requests for comment outside of business hours.
Musk also runs the electric car company Tesla and is the world’s second-richest person, according to Forbes magazine.
Lawyers for Musk, two of his holding companies, and Twitter did not immediately respond to requests for comment.
In a March 3 court filing, they called Heresniak’s claims “a disjointed laundry list of – often irrelevant – grievances against Elon Musk.”
Heresniak sued on May 25, 2022, one month after Twitter accepted Musk’s $54.20 (roughly Rs. 4,488) per share buyout offer. The transaction closed on October 27.
Twitter has since struggled to maintain ad revenue, with some advertisers expressing concern that loosened content rules could leave their ads associated with hate speech or other “wrong messages.”
On May 12, Musk named former NBCUniversal advertising chief Linda Yaccarino as Twitter’s new chief executive.
The case is Heresniak v Musk et al, US District Court, Northern District of California, No. 22-03074.
© Thomson Reuters 2023