Twitter shareholders are suing Elon Musk over the chaotic acquisition process that resulted in the volatile changes in the company's share price.
Investors say Musk saved $156 million by not disclosing that he had bought more than 5% of Twitter on March 14.
Musk continued to buy shares after that, and finally revealed in early April that he owned 9.2% of the company, according to a lawsuit filed Wednesday in San Francisco federal court.
They also sued Twitter as a defendant, arguing the company had an obligation to investigate Musk's behavior, despite not seeking damages from the company.
Investors said Musk continued to buy shares after that, and finally revealed in early April that he owned 9.2% of the company, according to a lawsuit filed Wednesday in San Francisco federal court.
"By delaying the disclosure of his stock on Twitter, Musk engaged in market manipulation and bought Twitter stock at a very low price," the investor said, as quoted by The Guardian.
Neither Musk nor his attorneys immediately responded to the lawsuit. Similarly, Twitter declined to comment.
Investors said the recent drop in Tesla's stock had put Musk's ability to finance his Twitter acquisition in "grave jeopardy" because he had pledged his stake as collateral to secure a loan he needed to buy the company.
Tesla shares traded around $700 on Thursday, down from above $1,000 in early April.
The Wall Street Journal had reported that the timing of Musk's stock disclosure had sparked an investigation by the US Securities and Exchange Commission (SEC).
The SEC requires any investor who purchases more than 5% stake in a company to disclose their holdings within 10 days of crossing the threshold.
Investors also said public criticism by Musk of the company, including a May 13 tweet that stated the purchase was "temporarily on hold" until Twitter proves that spam bots account for less than 5% of its users, was an attempt to further push the share price down.
Musk himself on Wednesday pledged an additional $6.25 billion in equity financing to fund his bid for Twitter, a sign that he is still working on finalizing a deal.