Case 3:22-cv-03074 Document 1 Filed 05/25/22 Page 1 of 72
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`COTCHETT, PITRE & MCCARTHY, LLP
`Joseph W. Cotchett (SBN 36324)
`jcotchett@cpmlegal.com
`Mark C. Molumphy (SBN 168009)
`mmolumphy@cpmlegal.com
`Anne Marie Murphy (SBN 202540)
`ammurphy@cpmlegal.com
`Tyson C. Redenbarger (SBN 294424)
`tredenbarger@cpmlegal.com
`Julia Q. Peng (SBN 318396)
`jpeng@cpmlegal.com
`San Francisco Airport Office Center
`840 Malcolm Road, Suite 200
`Burlingame, California 94010
`Telephone: (650) 697-6000
`
`BOTTINI & BOTTINI, INC.
`Francis A. Bottini, Jr. (SBN: 175783)
`fbottini@bottinilaw.com
`Anne B. Beste (SBN 326881)
`abeste@bottinilaw.com
`Albert Y. Chang (SBN 296065)
`achang@bottinilaw.com
`Yury A. Kolesnikov (SBN 271173)
`ykolesnikov@bottinilaw.com
`Nicholas H. Woltering (SBN 337193)
`nwoltering@bottinilaw.com
`7817 Ivanhoe Avenue, Suite 102
`La Jolla, California 92037
`Telephone: (858) 914-2001
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`Counsel for Plaintiff
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`Case No.:
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`Class Action
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`COMPLAINT FOR
`(1) VIOLATION OF THE
`CALIFORNIA CORPORATIONS
`CODE; AND
`(2) DECLARATORY AND
`INJUNCTIVE RELIEF
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`DEMAND FOR JURY TRIAL
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`
`WILLIAM HERESNIAK, on behalf of
`himself and all others similarly situated,
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`Plaintiff,
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`ELON R. MUSK and TWITTER, INC.,
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`vs.
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`Defendants,
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` Class Action Complaint for Violations of the California Corporations Code
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`Case 3:22-cv-03074 Document 1 Filed 05/25/22 Page 2 of 72
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`TABLE OF CONTENTS
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`INTRODUCTION AND SUMMARY OF THE ACTION ................................................. 1
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`JURISDICTION AND VENUE ............................................................................................ 9
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`INTRADISTRICT ASSIGNMENT ..................................................................................... 9
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`THE PARTIES ....................................................................................................................... 9
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`CLASS ACTION ALLEGATIONS ................................................................................... 10
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`SUBSTANTIVE ALLEGATIONS ..................................................................................... 11
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`A.
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`B.
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`C.
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`D.
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`E.
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`Background of the Musk Buyout of Twitter .............................................................. 11
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`Musk’s Failure to Timely Disclose His 9+% Stake in Twitter, Failure to Disclose He
`Had Been Invited to Join the Twitter Board, and Failure to Disclose He Intended to
`Make an Offer to Acquire Twitter, and Contray to the Law ..................................... 13
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`After Unexpectedly Announcing He Would Not Join Its Board, Musk Discloses an
`Intent to Buy Twitter, and Threatens to Go Hostile Through a Tender Offer if
`Twitter’s Board Does Not Acquiesce ........................................................................ 18
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`Musk Finances the Proposed Buyout in Part by Pledging Billions of Dollars of His
`Tesla Stock as Collateral for a Loan From Morgan Stanley ...................................... 20
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`As Tesla’s Stock Plunges in the 30 Days After Announcement of the Buyout,
`Threatening a Margin Call and a Forced Sale of Musk’s Tesla Stock, Musk Begins to
`Make False Statements and Engage in Market Manipulation of Twitter’s Stock ..... 24
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`1.
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`2.
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`3.
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`4.
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`5.
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`Friday May 13, 2022 Tweet ........................................................................... 25
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`Musk’s May 14, 2022 Tweet ......................................................................... 26
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`Musk’s May 16, 2022 Statement ................................................................... 28
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`Musk’s May 17, 2022 Tweet ......................................................................... 29
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`Musk’s May 21, 2022 Tweets ........................................................................ 30
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`I.
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`II.
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`III.
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`IV.
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`V.
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`VI.
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`VII. CAUSES OF ACTION ........................................................................................................ 33
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`FIRST CAUSE OF ACTION
`Cal. Corp. Code §§ 25400 and 25500 .................................................................................... 33
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`SECOND CAUSE OF ACTION
`Cal. Corp. Code §§ 25401 and 25501 .................................................................................... 34
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`THIRD CAUSE OF ACTION
`For Declaratory and Injunctive Relief ................................................................................... 34
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`FOURTH CAUSE OF ACTION
`For Violation of Cal. Corp. Code § 25402 and 25502.5 ........................................................ 35
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`FIFTH CAUSE OF ACTION
`For Unjust Enrichment ........................................................................................................... 35
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`VIII. PRAYER FOR RELIEF ...................................................................................................... 36
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`IX.
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`JURY TRIAL DEMAND .................................................................................................... 37
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` Plaintiff alleges the following (a) upon personal knowledge with respect to the matters
`pertaining to Plaintiff; and (b) upon information and belief with respect to all other matters, based upon,
`among other things, the investigations undertaken by Plaintiff’s counsel. Plaintiff believes that
`substantial additional evidentiary support will exist for the allegations set forth below after a reasonable
`opportunity for discovery.
`I.
`INTRODUCTION AND SUMMARY OF THE ACTION
`1.
`Plaintiff brings this class action on behalf of all stockholders of Twitter, Inc., a San
`Francisco based company, who have been harmed by the actions of Defendant Elon R. Musk. Plaintiff
`asserts claims against Defendant Musk for violations of California Corporations Code §§ 25400, 25401,
`25500, and 25501 and against Defendant Twitter, Inc. for declaratory, injunctive relief, and unjust
`enrichment.
`2.
`Defendant Twitter, Inc., headquartered in San Francisco, operates a social media
`platform that allows its users to send and receive “tweets.” Defendant Musk is a prolific user of Twitter
`and one of its most-followed members, with 90 million followers, making Musk’s Twitter account the
`eighth most popular account on Twitter.
` On April 25, 2022, Twitter, Inc. announced that it had agreed to sell itself to Elon Musk
`3.
`for $54.20 per share, or approximately $44 billion (the “Buyout” or “Proposed Buyout”). Musk
`negotiated the Twitter Buyout over the weekend of April 23-24, 2022 without carrying out any due
`diligence. The Buyout is only conditioned on approval of Twitter’s shareholders at a meeting to be
`scheduled this summer, regulatory approval, and closing of the Buyout by October 24, 2022.
`4.
`Before agreeing to buy Twitter for $44 billion, Musk, one of the world’s richest
`individuals valued at $276 billion according to the Bloomberg Billionaires Index, and a sophisticated
`businessman with a phalanx of lawyers and investment bankers, according to the press, specifically
`agreed to waive detailed due diligence as a condition of the merger agreement. At the time, Musk was
`well aware that Twitter had a certain amount of “fake accounts” and accounts controlled by “bots” and
`had in fact settled a lawsuit based on the fake accounts for millions of dollars. Musk had tweeted about
`that issue at Twitter several times in the past, prior to making his offer to acquire Twitter with full
`knowledge of the bots.
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`5.
`Musk and his team were also well aware of a $809.5 million settlement Twitter entered
`into in September 2021, in a securities fraud class action alleging Twitter overstated its user numbers
`and growth rate -- In re Twitter Inc. Securities Litigation, 16-cv-05314, U.S. District Court, Northern
`District of California (San Francisco). All the documents from that case were publicly available to
`Musk, including a website (www.twittersecuritieslitigation.com) containing, among other things, the
`Court’s order denying Twitter’s motion for summary judgment. See Exhibit A (April 17, 2020 Order
`Denying Motion for Summary Judgment, at p. 16)(holding that Twitter’s false statements about its
`Daily Active Users (DAUs) and Monthly Active Users (MAUs) were material because “Twitter has
`publicly stated that its success and financial performance depend, at least in part, on the size and
`engagement of its user base.”).
`6.
`Musk believed he was obtaining Twitter at a sale price, since Twitter’s stock price had
`decreased significantly in the months before he made his offer, declining from $71.69 on July 23, 2021
`to just $32.42 on March 7, 2022. After Musk agreed to buy Twitter for $54.20, the stock market
`experienced a decline. The market decline, however, did not affect Twitter’s stock price. After the
`announcement of the Buyout, stock consistently traded close to the Buyout price, and around $50 per
`share. The small delta between its trading price and the $54.20 buyout price was typical of the trading
`prices of companies who have agreed to be acquired, characterized by a small discount for the time
`value of money and a relatively small risk that the deal will not go through.
`7.
`Musk had a unique and multi-billion-dollar problem. Musk pledged his Tesla stock as
`collateral for a $12.5 billion loan to finance the buyout of Twitter, however Tesla’s shares have
`declined by over 37% since the announcement of the Buyout, as reflected below:
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`8.
`Because Tesla’s stock is worth much less now than when Musk agreed to buy Twitter,
`Musk is at risk of a margin call or a requirement to put up more cash. Musk quickly acted to attempt to
`mitigate these personal risks to himself by engaging in unlawful conduct that moved the price of
`Twitter’s stock down. Musk proceeded to make statements, send tweets, and engage in conduct
`designed to create doubt about the deal and drive Twitter’s stock down substantially in order to create
`leverage that Musk hoped to use to either back out of the purchase or re-negotiate the buyout price by as
`much as 25% which, if accomplished, would result in an $11 billion reduction in the Buyout
`consideration. As detailed herein, Musk’s conduct was and continues to be illegal, in violation of the
`California Corporations Code, and contrary to the contractual terms he agreed to in the deal.
`9.
`Musk’s market manipulation worked -- Twitter has lost $8 billion in valuation since the
`Buyout was announced. As subsequently disclosed, Musk first started purchasing Twitter shares on
`January 31, 2022. Musk thereafter exceeded the 5% threshold, requiring him to file a Form 13G with
`the SEC. Musk did not timely file the Form 13G; failing to do so benefitted Musk because he was able
`to continue to buy Twitter shares at depressed prices. When Musk belatedly filed the Form 13G,
`Twitter’s shares increased substantially, rising 27% after he filed the 13G.
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`10. Musk benefitted himself by approximately $156 million by failing to timely file a Form
`13G.1 By delaying his disclosure of his stake in Twitter, Musk engaged in market manipulation and
`bought Twitter stock at an artificially low price, in violation of the California Corporations Code.
`11. Musk’s disregard for securities laws demonstrates how one can flaunt the law and the tax
`code to build their wealth at the expense of the other Americans. Musk’s insider trading profits may
`come with a slap on the wrist in the form of a fine from the SEC but will probably be limited to
`hundreds of thousands of dollars, according to legal and security experts.2
`12. When Musk eventually filed his Form 13G on April 4, 2022, it was materially
`misleading. He did not disclose his intent to join the Twitter Board and he failed to disclose that he was
`contemplating buying Twitter. Both disclosures would have caused Twitter’s stock to increase more
`than it did when his filing was made. Musk was later forced to file an amended Form 13G to comply
`with the law. As Tesla shares cratered by almost 30% in April and May 2022, Musk began to make
`disparaging comments about Twitter in an effort to drive its stock price down further.
`On May 13, 2022, at 5:44 a.m. (i.e., before the stock market opened), Musk issued a
`13.
`tweet which stated that the buyout was “temporarily on hold:”
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`14. Musk’s tweet (and public statement) was misleading and constituted an effort to
`manipulate the market for Twitter shares as he knew all about the fake accounts. The statement was
`false because the buyout was not, in fact, “temporarily on hold.” There is nothing in the buyout
`contract that allows Musk to put the deal “temporarily on hold.” Moreover, Musk’s statement was
`misleading because it stated or implied that Musk’s obligation to consummate the buyout was
`
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`1 See Reed Albergotti, “Elon Musk Delayed Filing a Form and Made $156 Million,” The Washington
`Post, April 6, 2022.
`2 Id.
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`conditioned on his satisfaction with due diligence to determine whether “spam/fake accounts do indeed
`represent less than 5% of users.” This was false because Musk had specifically waived detailed due
`diligence as a condition precedent to his obligations under the buyout contract. Thus, Musk had and has
`no right to cancel the buyout based on any results from due diligence concerning the number of
`spam/fake accounts at Twitter. Musk then continued issuing false and disparaging tweets about Twitter
`in an effort to drive its stock price down further.
`15. Musk’s false and misleading tweets had the desired effect, as they caused Twitters’ stock
`to decline in the days following the tweets, in stark contrast to the Nasdaq index, which increased, as
`reflected in the following chart:
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` On May 17, 2022, Musk doubled down on his “Friday the 13th” tweet, issuing another
`16.
`tweet stating that the deal “cannot go forward” while claiming almost 20% of accounts were fake.
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`17. Musk’s wrongful conduct has not only substantially harmed Twitter’s shareholders by
`causing Twitter’s stock to crater by approximately 25%, but it has also substantially harmed Twitter’s
`employees. As reported by the Wall Street Journal on May 21, 2022:
`In one 24-hour period this month, Twitter Inc.’s chief executive fired two widely liked senior
`executives and announced a hiring freeze, while billionaire Elon Musk suddenly said he was
`putting “on hold” an acquisition plan that could lead to a wholesale revamp of the social-
`media company.
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`It is a tricky time to work at Twitter. Far beyond the usual uncertainty at an acquisition target,
`Mr. Musk’s $44 billion takeover deal has left employees bewildered about what their jobs are
`and will be, as well as how to keep operating a platform with around 229 million daily users
`while its would-be owner uses it to publicly assail the company for everything from its free-
`speech policies to its business model.
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`Internal conversations and Slack channels are awash in distress and anger over the criticism,
`while company leaders who themselves have no way to know the outcome have responded
`with repeated staff meetings to try to soothe the angst and encourage people to press forward,
`according to current and former staffers and internal communications viewed by The Wall
`Street Journal.
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`“I expect the ‘chaos tax’ and ups and downs to continue,” Jay Sullivan, Twitter’s new head
`of product, wrote on May 13 in an internal message to thousands of employees that was viewed
`by the Journal.
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`Whatever the fate of the deal, many current and former employees say the company has been
`irrevocably shaped by the five weeks since Mr. Musk publicly disclosed his unsolicited bid to
`buy Twitter, one of the world’s most influential social-media platforms. Some employees have
`left. Many more say they are looking for new jobs. Others are hunkering down to await an
`uncertain fate under Mr. Musk, who recently tweeted an image of cartoon excrement at the
`current CEO.
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`On May 12, Mr. Agrawal told employees the company was pausing hiring and looking to cut
`costs, and that two senior executives—Bruce Falck, general manager of revenue, and Kayvon
`Beykpour, general manager of consumer—were leaving. Mr. Beykpour tweeted he was on
`paternity leave when he got the news.
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`The next day, Mr. Musk tweeted that the deal was “on hold” until he could get more
`clarification from the company about how pervasive bots were on the platform. That rattled
`already wobbly investor confidence that the deal will happen at the price Mr. Musk agreed
`to—if at all. Twitter shares are down more than 25% since late April. 3
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`3 See Deepa Seetharaman & Sarah Needleman, “Twitter Employees Face ‘Chaos Tax’,” THE WALL
`STREET JOURNAL, May 21, 2022.
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`18. Musk’s false statements and market manipulation have created “chaos” at Twitter’s
`headquarters in San Francisco:
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`19. Musk has also bullied current Twitter employees and stated that he would stop censoring
`hate speech:
`Among those most concerned are staff responsible for moderating content and developing tools
`that minimize abuse and hate speech on the platform, current and former employees say. Mr.
`Musk has repeatedly said Twitter’s limits on expression are too great and that he wants to
`allow almost all speech on the platform that isn’t illegal. Mr. Musk’s complaints echo those of
`others, including some conservative lawmakers who have criticized efforts at content
`moderation, saying they are subjective and can lead to bias.
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`Some current employees say they view Mr. Musk’s behavior on the platform, particularly his
`targeting of Ms. Gadde, as an example of the type of online bullying they have been tasked
`with minimizing.4
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`4 Id.
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`20. Musk has been accused of using Twitter to foster “dogpiling,” in which he encouraged
`his users to harass someone else, such as the case of Vernon Unsworth, a British diver who had spent
`days assisting the rescue of a group of Thai boys trapped in a flooded cave. After Musk offered a
`miniscule submarine to the rescue divers, Unsworth told the media that Musk’s idea was just a useless
`public relations stunt. Musk then took to Twitter, where (in tweets that he later deleted) he baselessly
`accused Unsworth of being a “pedo guy,” or pedophile. The tweets prompted hundreds of Musk fans to
`pile on to the diver with abusive, humiliating attacks.5
`21. Musk’s market manipulation of Twitter’s stock has also encouraged other market
`participants to short Twitter’s stock, including Hindenburg. After Musk began disparaging Twitter and
`his own buyout, Hindenburg shorted Twitter. On May 17, 2022, Hindenburg closed its short position
`for a large profit.6
`On May 18, 2022, Musk announced he would switch parties and become a Republican,
`22.
`calling the Democrats the “party of division & hate” to further excite the media of his conduct.
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`5 See Billy Perrigo, “Twitter Employees Have Spent Years Trying to Make the Platform Safer. Elon
`Musk Could Undermine All That,” TIME, Apr. 26, 2022.
`6 See Joshua Fineman, “Hindenburg Research Closes Twitter Short Position,” SEEKING ALPHA, May 17,
`2022.
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`II.
`JURISDICTION AND VENUE
`23.
`This Court has jurisdiction as the Defendants are located in and/or conduct business in
`California, including, but not limited to, the conduct here at issue, and because they have sufficient
`minimum contacts with California to render the exercise of jurisdiction by the California courts
`permissible under traditional notions of fair play and substantial justice.
`24.
`This Court has subject matter jurisdiction over this matter under 28 U.S.C. §1332,
`as this is a class action where at least one of the members of the Class is a citizen of a state different
`from at least one of the defendants, and the matter in controversy exceeds the sum or value of
`$5,000,000.
`25.
`Venue is proper in this judicial district under 28 U.S.C. §1391, because: (1) one or
`more defendants reside in this District; and (2) a substantial part of the events or omissions giving
`rise to the claims occurred in this District. Twitter is headquartered in San Francisco, California at 1355
`Market Street, Suite 900. Musk’s wrongful conduct took place in substantial part and have an effect in
`San Francisco, California, including his use of Twitter tweets to make false statements and engage in
`market manipulation of Twitter stock.
`III.
`INTRADISTRICT ASSIGNMENT
`26.
`A substantial part of the events or omissions which give rise to the claims in this
`action occurred in the county of San Francisco, and as such this action is properly assigned to the
`San Francisco division of this Court.
`
`IV.
`THE PARTIES
`27.
`Plaintiff William Heresniak is a current shareholder of Twitter, Inc. and has owned
`Twitter stock at all relevant times. Plaintiff is a resident and citizen of Virginia.
`28.
`Defendant Twitter, Inc. is a Delaware corporation headquartered in San Francisco,
`California. Twitter is a citizen of California and Delaware.
`29.
`Defendant Elon R. Musk is an individual who currently owns approximately 9.2% of
`Twitter’s stock. On April 25, 2022, Musk announced a definitive agreement to buy Twitter for $54.20
`per share in cash. Upon information and belief, Musk is a citizen and resident of Texas.
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`V.
`CLASS ACTION ALLEGATIONS
`30.
`Plaintiff brings this action as a class action, pursuant to F.R.C.P. 23, on behalf of all
`stockholders of Twitter, Inc. who have been harmed and/or are threatened with harm by Defendants’
`unlawful conduct in connection with Musk’s proposed buyout of Twitter. Excluded from the Class are
`Defendants herein and any person, firm, trust, corporation, or other entity related to, or affiliated with,
`any of the Defendants and their successors in interest (the “Class”).
`31.
`This action is properly maintainable as a class action because:
`(a)
`The Class is so numerous that joinder of all members is impracticable. There are
`millions of shares of the Company’s common stock outstanding owned by hundreds, if not thousands,
`of stockholders;
`(b)
`There are questions of law and fact which are common to the Class including,
`inter alia, the following: (i) whether Musk made false and misleading statements; (ii) whether Musk
`has and continues to engage in conduct in an effort to manipulate the market for Twitter stock; (iii)
`whether Musk created a false or misleading appearance with respect to the market for Twitter stock; (iv)
`whether Musk engaged in conduct designed to raise or depress the price of Twitter stock for the purpose
`of inducing the purchase or sale of Twitter stock by others; (v) whether Musk purchased or sold Twitter
`stock based on material, non-public information; and (vi) the extent of damage sustained by Class
`members.
`
`(c)
`Plaintiff is committed to prosecuting this action and has retained competent
`counsel experienced in litigation of this nature;
`(d)
`The claims of Plaintiff are typical of the claims of other members of the Class
`and Plaintiff has the same interests as the other members of the Class. Plaintiff will fairly and
`adequately represent the Class; and
`(e)
`Defendants have acted in a manner which affects Plaintiff and all members of the
`Class alike, thereby making class treatment appropriate.
`The prosecution of separate actions by individual members of the Class would create a risk of
`inconsistent or varying adjudications with respect to individual members of the Class which would
`establish incompatible standards of conduct for Defendants, or adjudications with respect to individual
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`members of the Class which would, as a practical matter, be dispositive of the interests of other
`members not parties to the or substantially impair or impede their ability to protect their interests.
`VI.
`SUBSTANTIVE ALLEGATIONS
`Background of the Musk Buyout of Twitter
`
`A.
`
`32.
`Elon Musk is an active user of the Twitter platform with close to 90 million followers,
`making him one of Twitter’s most popular accounts.
`33. Musk has violated SEC rules related to going-private transactions before. He issued
`false tweets in the past claiming he was going to take his company, Tesla, Inc., private, and that he had
`already secured financing. The SEC sued Musk, and he was forced to settle the case and agree to a
`consent decree dated September 29, 2018, as amended April 26, 2019. The settlement and consent
`decree required Musk to pay a $20 million fine, give up his role as Tesla’s chairman, and refrain from
`issuing tweets related to Tesla without the pre-approval of a “Securities Counsel” and Tesla’s
`Disclosure Controls Committee. Musk later demanded that his law firm, Cooley LLP, fire a former
`SEC lawyer who had worked on the SEC case and later joined Cooley, or else Cooley would lose
`Musk’s business.7
`34. Musk has been sued by Tesla shareholders. On April 1, 2022, the United States District
`Court for the Northern District of California issued an order granting in part Plaintiffs’ Motion for
`Summary Judgment and holding that Musk’s tweets regarding his intent to take Tesla private were false
`and misleading and that Musk knew or recklessly disregarded the falsity of the tweets. See In re Tesla,
`Inc. Sec. Litig., Case No. 18-cv-04685 (N.D. Cal.), Docket No. 387.8
`
`
`7 See Rebecca Elliott, “Elon Musk’s Tesla Asked Law Firm to Fire Associate Hired From SEC,” THE
`WALL STREET JOURNAL, Jan. 15, 2022.
`8 Musk continues to flaunt court and governmental findings and orders. Musk gave a TED Talk in
`Vancouver on April 14, 2022 during which he emphatically proclaimed in reference to his August 7,
`2018 Tesla tweets, inter alia, that “funding was actually secured – I want to be clear about that – in fact
`that gives me a good opportunity to clarify that – and funding was indeed secured” before going on to
`refer to the SEC’s San Francisco office as “bastards” and claiming that he settled with the agency only
`because they had a “gun to [his] child’s head.” See https://www.ted.com/talks/elon_musk_elon
`_musk_talks_twitter_tesla_and_how_his_brain_works_live_at_ted2022.
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`On May 12, 2022, it was announced that the SEC was again investigating Musk, this
`35.
`time for his failure to timely file the Form 13D regarding his more than 5% stake in Twitter. In addition
`to violating SEC rules, Musk’s false tweets and his wrongful conduct constitute a violation of various
`provisions of the California Corporations Code designed to protect investors.
`36.
`As disclosed by Twitter in its Proxy Statement filed on May 17, 2022 regarding the
`Buyout, Musk Tweeted comments regarding Twitter’s business, the Twitter platform and functionality,
`and Twitter’s content moderation policies.
`On March 26, 2022, Musk called Jack Dorsey (Twitter’s founder) in California to
`37.
`discuss the future direction of social media, including the benefits of open social protocols. Dorsey had
`previously communicated his views on these topics to the Twitter Board and publicly. Dorsey lives in
`the Sea Cliff neighborhood of San Francisco and his communications with Musk were made to and
`from California.
`Also on March 26, 2022, Musk contacted Egon Durban, one of Twitter’s directors, to
`38.
`set up a discussion between Musk and Durban. Musk and Durban subsequently spoke on March 26,
`2022 and March 27, 2022 and discussed the potential of Musk joining the Twitter Board, as well as
`the fact that Musk had purchased a significant stake of more than five percent of Twitter’s common
`stock.9 Durban informed Bret Taylor, the chairperson of the Twitter Board,10 Martha Lane Fox, one of
`Twitter’s directors and the chairperson of Twitter’s Nominating and Corporate Governance Committee
`(the “NomGov Committee”), and Parag Agrawal, Twitter’s chief executive officer, of Musk’s
`communication. Durban, Taylor, Agrawal and Lane Fox discussed Musk’s communications and
`determined (1) that Durban would connect Musk with Taylor, Agrawal and Lane Fox, and they would
`also discuss with Musk his potential interest in joining the Twitter Board; (2) to call meetings of the
`NomGov Committee and of the Twitter Board to discuss Musk’s communications and potential interest
`in joining the Twitter Board; and (3) that Lane Fox would inform each member of the Twitter Board in
`
`
`9 See May 17, 2022 Proxy Statement at 42.
`10 Taylor, in addition to being a Twitter director, is the Co-CEO of Salesforce.com and lives in the San
`Francisco Bay Area. His communications with Musk were disseminated from and to California.
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`advance of the Twitter Board meeting of Musk’s communications. Lane Fox subsequently informed
`the members of the Twitter Board of Musk’s initial communications.
`B. Musk’s Failure to Timely Disclose His 9+% Stake in Twitter, Failure to Disclose
`He Had Been Invited to Join the Twitter Board, and Failure to Disclose He
`Intended to Make an Offer to Acquire Twitter, and Contray to the Law
`
`
`39.
`Despite the fact that Twitter has admitted that Musk already owned 5% of Twitter’s
`stock on or before March 26, 2022, Musk failed to file a Schedule 13D with the SEC, as he was
`required to do. Musk belatedly filed a Schedule 13G on April 4, 2022, at least 10 days after his stake
`surpassed the trigger point for disclosure. Musk has not