NEW YORK ¨C Elon Musk was sued on Tuesday by former Twitter Inc. shareholders who claim they missed out on the recent run-up in its stock price because he waited too long to disclose a 9.2% stake in the social media company.

In a proposed class action filed in Manhattan federal court, the shareholders said Musk, the chief executive of electric car company Tesla Inc., made ¡°materially false and misleading statements and omissions¡± by failing to reveal he had invested in Twitter by March 24, as required under federal law.

Twitter shares rose 27% on April 4, to $49.97 from $39.31, after Musk disclosed his stake, which investors viewed as a vote of confidence from the world¡¯s richest person in San Francisco-based Twitter.

Former shareholders led by Marc Rasella said the delayed disclosure let Musk buy more Twitter shares at lower prices, while defrauding them into selling at ¡°artificially deflated¡± prices.

The lawsuit seeks unspecified compensatory and punitive damages.

A lawyer for Musk had no immediate comment. Tesla is not a defendant.

U.S. securities law requires investors to disclose within 10 days when they have acquired 5% of a company, which in Musk¡¯s case would have been March 24.

Twitter announced on April 5 that Musk would join its board of directors, but this week said he had decided not to.

By not joining the board, Musk, a prolific Twitter user, can keep buying shares without being bound by his agreement with the company to limit his stake to 14.9%.

Some analysts have suggested Musk could push Twitter to make changes, or even pursue an unsolicited bid for the company.

Rasella said he sold 35 Twitter shares for $1,373, or an average price of $39.23, between March 25 and 29. Musk is worth $265.1 billion, according to Forbes magazine.

The case is Rasella v Musk, U.S. District Court, Southern District of New York, No. 22-03026.