Elon Musk was ordered by a US judge to face most of a lawsuit claiming he defrauded former Twitter shareholders last year by waiting too long to disclose that he had invested in the social media company, which he later bought and renamed X.
In a decision made public this week, US District Judge Andrew Carter said shareholders in the proposed class action could try to prove that Mr Musk intended to defraud them by waiting 11 days past a US Securities and Exchange Commission deadline to reveal he had bought 5 per cent of Twitter's shares.
The judge in Manhattan also dismissed an insider trading claim against Mr Musk, the world's richest person.
Lawyers for Mr Musk did not immediately respond on Tuesday to requests for comment.
Shareholders led by an Oklahoma firefighters pension fund said Mr Musk saved more than $200 million by adding to his Twitter stake, and quietly talking with its executives about his plans, before finally disclosing a 9.2 per cent stake in April last year.
The shareholders also said they sold Twitter shares at artificially low prices because Mr Musk hid what he was doing.
Mr Musk's lawyers argued that their client was “one of the busiest people on the planet” and that any disclosure failure was “inadvertent”.
Mr Carter said he could not infer that Mr Musk was “too busy” to comply with SEC rules if he could find time to buy Twitter shares, meet company executives and post online about Twitter.
He also found evidence that Mr Musk understood the 5 per cent disclosure rule, including that he had given evidence about it under oath and had properly disclosed stakes in his electric car maker Tesla and the former SolarCity at least 20 times.
Katie Sinderson, a lawyer for the plaintiffs, declined to comment.
Mr Musk bought Twitter for $44 billion last October.
Under the SEC rule, investors have 10 days to disclose when they have acquired 5 per cent of a company.
Twitter shares rose 2 per cent on April 4 last year to $49.97 from $39.31, after Mr Musk revealed his 9.2 per cent stake. Mr Musk's takeover valued Twitter at $54.20 per share.