© Reuters. FILE PHOTO: Elon Musk is seen through the Twitter logo in this illustration taken October 28, 2022. REUTERS/Dado Rovik/Illustrative
By Jonathan Stempel
(Reuters) – A judge has dismissed a proposed lawsuit against Elon Musk alleging he cheated Twitter shareholders multiple times last year while buying the social media company for $44 billion.
In a decision issued Monday, U.S. District Judge Charles Breyer in San Francisco said plaintiff William Heresniak lacked standing to file suit because he challenged “mistakes associated” with Musk’s acquisition, not the fairness of the acquisition itself.
Breyer said Heresniak did not show harm from Musk’s late disclosure of a 9.2% stake to Twitter, which the lawsuit said allowed him to buy more shares at lower prices before announcing the acquisition, or from closing a month and a half later than planned. .
The judge also found no evidence that Musk helped two friends on Twitter’s board, co-founder Jack Dorsey and managing partner of Silver Lake private equity firm Egon Durban, breach their fiduciary duties by favoring their interests and Musk’s.
Allowing Dorsey to convert nearly $1 billion of his Twitter shares into an ownership stake in the new company, Breyer said, only reduced the amount Musk would have to pay at closing, and did not “improperly divert” money from other shareholders.
Heresniak’s attorneys did not immediately respond to requests for comment outside of business hours.
Musk also runs the electric car company Tesla (NASDAQ: Inc) and is the second richest person in the world, according to Forbes.
Lawyers for Musk, two of his holding companies and Twitter did not immediately respond to requests for comment.
In a March 3 lawsuit, they called Heresniak’s allegations “a disjointed laundry list of — often irrelevant — complaints against Elon Musk.”
Heresniak filed a lawsuit on May 25, 2022, one month after Twitter accepted Musk’s buyout offer of $54.20 per share. The deal closed on October 27.
Twitter has since struggled to maintain ad revenue, with some advertisers concerned that relaxed content rules could leave their ads associated with hate speech or other “false messages.”
On May 12, Musk named former NBCUniversal advertising director Linda Yaccarino as Twitter’s new CEO.
The case is Heresniak v Musk et al, US District Court, Northern District of California, No. 22-03074.