A lawsuit filed against Elon Musk by William Heresniak, a previous shareholder of Twitter, was dismissed by U.S. District Judge Charles Breyer in San Francisco.
The judge made this decision on the grounds that Heresniak did not demonstrate any harm resulting from Musk’s delayed announcement of a 9.2% ownership in Twitter while it was publicly traded, nor from the postponements that caused the ultimate sale to occur one and a half months later than initially scheduled, as reported by Reuters. The lawsuit was primarily focused on questioning Musk’s acquisition strategy rather than the fairness of the transaction itself.
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 suppress the price of the stock as he amassed his stake ahead of striking the buyout deal, the complaint said.
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.
Judge Breyer ruled that the decision to convert Dorsey’s approximately $1 billion in Twitter shares into equity in the new company only served to decrease the sum Musk had to settle at the close of the deal, rather than unfairly diverting funds from other shareholders.
In a court filing dated March 3, Heresniak’s allegations were dismissed as “a disjointed assortment of grievances against Elon Musk, many of which are irrelevant.” Heresniak initiated the lawsuit on May 25, 2022, a month subsequent to Twitter accepting Musk’s acquisition offer of $54.20 per share. The deal was finalized on October 27.
Since the transaction, Twitter has faced difficulties in preserving its ad revenue. Earlier in May, Musk announced his plan to appoint Linda Yaccarino as the new CEO of Twitter.