Thread by @ZeroSumBond

The Twitter Class Action Complaint v. Elon Musk has been released by the SDNY. The case outlines Elon (& FA Birchall's) disregard of SEC filing requirements and market manipulation in regard to the purchase of his initial Twitter position

The complaint begins that Musk and Birchall (Musk's FA) enlisted a redacted MD at Morgan Stanley to acquire a position in Twitter secretly. Birchall informed the MS exec their plan had been blessed by legal counsel (when they hadn't even consulted with their legal counsel).

Despite awareness of the 5% disclosure rule by both Elon and Birchall (Elon testified under oath in his 2018 SEC deposition to this, as well as filing 20 13D/13G filings historically ), Musk failed to file any 13D/13G filing when Morgan Stanley acquired over 5%.

Despite a series of warnings from MS, who repeatedly warned Birchall/Musk to have their Counsel confirm. MS even included bright red disclaimers noting they do not provide tax/legal advice. Birchall told MS their plan had been blessed by counsel, when they hadn't told counsel!!!!

Throughout the process the MD at MS was tasked with keeping the acquisition as secretive as possible, with repeated questioning from Birchall as to whether they were moving the stock. MS kept the trading very secretive, including not even informing their compliance department.

Birchall and Musk were kept up to date on a daily and intra-day basis of how they were performing, with key emphasis on how they were performing vs VWAP (volume weighted average price)

During the acquisition process, Elon began tweeting about potential improvements / changes re: Twitter. This triggered the MS exec to immediately panic that this might alert the market and warned Elon/Birchall.

In response to this Elon begin issuing misleading statements on Twitter, including that he was considering the creation of a new platform to compete with Twitter (while secretly building a huge stake in Twitter).

The press picked up on this with multiple articles noting Elon was considering starting a new platform. MS informed Birchall of one such article by Piers Morgan noting "those who don't know speak", to which Birchall replied this was "typically the case"

All the while Elon had arranged to meet with Twitter's founder and former CEO Jack Dorsey to discuss the future direction of social media and the business.

Elon/Birchall filed their 13G 11 days late the day after Twitter had formally invited Musk to join its board of directors. MS and Birchall strategized on how to manufacture "plausible deniability" concerning Musk and Birchall's scheme to deceive Twitter Investors.

The 13G only partially revealed the truth, filing as if they were passive and omitting any mention Musk was joining the board. Elon/Birchall also modified the form to omit a required certification. Lawyers failed to sign off. Counsel was only appointed after the buying was done.

Subsequently on Apr. 5th Twitter announced it was appointing Elon to the board. Musk's counsel amended their (fraudulent) 13G and filed a 13D that day that disclosed his ownership and he was joining the board. Their counsel signed off on this filing (unlike the 13G)

Post the block acquisition period, Elon confirmed the acquisition of Twitter was always his plan in a call with Twitter execs noting that free speech was as important as getting a man to Mars. Further reiterating that Elon/Birchall has misled the market on their intentions.

Not only was the acquisition of the block a violation of SEC rules (5% reporting requirements & market manipulation), Musk also drew scrutiny from the DOJ and FTC - which he failed to inform regarding his Twitter acquisition despite it being required.

On April 10th, Elon appointed MS to work with him to acquire Twitter. Elon waived his right to DD. The impact on Tesla stock deeply concerned Elon, with him emailing MS telling them to slow down. As Tesla continued to decline, he claimed Twitter mislead him to tried to back out.

The class action alleges that Twitter investors were duped out of an estimated $200m from the scheme performed by Elon/Birchall.

This rather quickly summarises the legal case (highly recommend the full doc), but there are other aspects of the documents which are particularly interesting and worth looking at. NB:Lots of the above / doc contain info from discovery that was not otherwise known to the market.

1. Musk uses his family office / Tesla shares to "reward his collaborators"

2. The document confirms Jared Birchall's positions amongst his companies (CEO at Neuralink, CFO at xAI, director at TBC and Musk's family office) and that he has power of attorney over his brokerage accounts.

3. While mostly not new information, the case also outlines Elon's continued contempt of the SEC/regulators in much detail. He also notes that his Twitter sitter frequently does not review his tweets before he sends them (despite being required to do so)

4. MS has a wide relationship with Musk, being key in the block as well as the acq. and financing. MS is keen to maintain the relationship to possibly take Musk co's public. Musk has sought to fire others for perceived betrayals inc. a Cooley LLP lawyer that worked for the SEC

To Conclude: In my view this document has shown the emperor has no clothes more than anything before. Elon/Birchall showed intentional neglect of laws/regulations despite continued warnings, intentional market manipulation and confirmation of Birchall's roles in his companies.

$TSLA $TSLAQ One has to ask if Birchall/Elon have such blatant disregard of rules/regulations how they also view accounting standards, company perimeters/intra-company dealings. The first card in the house of cards has fallen.

It makes you wonder if the real reason he wants 25% / more voting power is because he cannot risk losing his board. Independent directors who might discover the major accounting issues at Tesla as described in my longer thread. Makes a lot more sense

And ask questions why signs of financial distress / liquidity issues show up at Musk entities. X not paying critical suppliers & rent, SpaceX had liens placed against them for not paying vendors, Tesla laying off 20% of workforce and recent 1% APR offers = selling cars at a loss.

Could it be the empire just relies on perpetually raising more capital? Is Elon under pressure from investors on this point and that's why he denied SpaceX/xAI raising earlier in the year? Ask why.