Elon Musk faces a lawsuit from Twitter investors for not promptly disclosing the extent of his stake in the company.

• When an investor acquires more than a 5% stake in a company, federal trade laws mandate that they must notify the Securities and Exchange Commission within 10 days.
• On March 14, Musk allegedly reached the milestone of owning 5% of Twitter stock, which he began purchasing in January. As a result, he should have informed the SEC by March 24.
• Some Twitter investors claim they missed out on potential profits due to the delay.

Elon Musk is being sued by a group of shareholders for allegedly not disclosing his acquisition of a substantial stake in the social media company within the proper timeframe.

On April 4, Elon Musk, CEO of SpaceX, disclosed that he had acquired a 9.2% stake in Twitter, causing shares to surge as investors perceived the action as an endorsement.

But his disclosure may have been too late.

When an investor acquires more than a 5% stake in a company, federal trade laws mandate that they must notify the Securities and Exchange Commission within 10 days.

On March 14, Musk allegedly reached the milestone of owning 5% of Twitter stock, which he began purchasing in January. As a result, he should have informed the SEC by March 24.

A spokesperson for the world's wealthiest individual, Elon Musk, did not promptly respond to a CNBC inquiry for comment.

A lawsuit filed Tuesday in New York by law firm Block & Leviton on behalf of several Twitter shareholders claims that Musk bought more Twitter stock at a lower price during the time frame between reaching the 5% ownership threshold and publicly disclosing his stake.

A half-dozen legal and securities experts believe that the delay may have aided Musk in earning $156 million.

On Apr. 4, Twitter's stock experienced a 27% increase in value after it was revealed that Musk had acquired a 9.2% stake, worth approximately $3 billion.

A class action lawsuit has been filed by investors who allege they suffered losses due to Musk's failure to disclose his shareholding earlier.

Elon Musk failed to file a report within the 10-day deadline under Sections 13(d) and 13(g) of the Securities Act of 1933 regarding his 5% ownership in a public company, according to Alon Kapen, a corporate transaction lawyer with Farrell Fritz, as stated in a CNBC report.

Kapen stated that he had an additional 10 days to purchase more shares, increasing his ownership by 4.1%, before the per share price spike on April 4.

Despite disclosing his Twitter stake, Musk has decided not to join the board of the company.