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Twitter investors sue Elon Musk for alleged market manipulation

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Twitter investors are suing Elon Musk and the social media platform over the handling of the billionaire's $44bn bid for the company

Twitter investors are suing Elon Musk and the social media platform over the handling of the billionaire's $44bn bid for the company.

The lawsuit accuses Musk of "wrongful conduct" as his "false statements and market manipulation have created 'chaos' at Twitter's headquarters in San Francisco".

Twitter shares are around 27% lower than Mr Musk's $54.20 offer price.

The lawsuit also said Mr Musk benefitted financially by delaying the disclosure of his significant stake in Twitter, and his plan to become a board member of the company.

It claimed that several tweets posted by Mr Musk, who is a regular Twitter user with more than 95m followers, were "misleading".

This included a post in which Mr Musk said his bid for Twitter was on hold  because of his doubts over the number of fake accounts on the platform.

The tweet on 13 May "constituted an effort to manipulate the market for Twitter shares as he knew about the fake accounts," the lawsuit said.

Musk's tweet that the deal to buy Twitter was "temporarily on hold" defied the fact that there is nothing in the purchase contract allowing that to happen, the suit argued.

Filed Wednesday by a shareholder, the claim seeks class action status and calls on a federal court in San Francisco to back the validity of the deal and award shareholders any damages allowed by law.

On Friday, Frank Bottini, who is one of the lawyers representing the Twitter investors, told the BBC that the lawsuit was filed as Mr Musk "continues to disparage the company he wants to buy for $44bn in an effort to renegotiate the purchase price".

Analysts are of the view that Mr Musk may be looking for ways to reduce the $44 bn offer or walk away from the deal.

Speaking at a technology conference earlier this month, Mr Musk said striking a deal at a lower price was "not out of the question".

The proposed class-action lawsuit was filed this week at the US District Court for the Northern District of California by investor William Heresniak, who said he was acting "on behalf of himself and all others similarly situated".

Also read: Musk clinches deal to buy Twitter for $44 billion; will Trump bounce back on social media?