Jurors were asked to decide if two tweets and comments Musk made on a podcast in May 2022 amounted to him intentionally defrauding Twitter shareholders
A jury in the federal court in San Francisco found Elon Musk liable for misleading investors. It said he deliberately drove down Twitter’s stock price in the months leading up to his $44 billion acquisition of the social media company in 2022. However, it absolved him of some fraud allegations, finding that he did not “scheme” to mislead investors.
The civil trial was focused on a class-action lawsuit filed just before Musk took control of Twitter, which he later renamed X. Jurors were reportedly asked to decide if two tweets and comments Musk made on a podcast in May 2022 amounted to him intentionally defrauding Twitter shareholders, who sold their shares based on Musk’s statements, Associated Press reported.
After nearly four days of deliberations, the nine-person jury reached its verdict, close to three weeks after the trial began on March 2. It held Musk liable for misleading investors through two tweets, including one that said the Twitter deal was “temporarily on hold.”
It also cleared Musk over comments made on a podcast, finding no intentional scheme to defraud.
The panel awarded shareholders damages ranging from about $3 to $8 per share per day, which lawyers for the plaintiffs said adds up to roughly $2.1 billion. Musk’s net worth is estimated at around $814 billion, much of it tied to his stake in Tesla.
What was the trial about?
A large part of the trial centred on Musk’s claims about fake accounts on Twitter. He argued that the number of bots was far higher than the 5% reported by the company. Musk used what he called Twitter’s misrepresentation of the number of fake accounts on its service as a reason to retreat from the purchase.
When Musk attempted to withdraw, Twitter sued him in a Delaware court to force the deal through. Just before the trial was set to begin, Musk reversed his decision and agreed to go ahead with the original purchase.
The case mainly examined whether Musk’s tweets were intended to push down Twitter’s stock price. These tweets, including one from May 13, 2022, saying the deal was “temporarily on hold.”
The jury found that while Musk did mislead investors with two tweets, he did not do so with a statement he made on a podcast because it was an opinion. The jurors also absolved him of scheming to drive down the stock.
What did Musk say?
In his testimony, Musk maintained that Twitter’s leadership lied about the number of bots on the platform and withheld information from him about how the number of fake accounts was calculated.
Musk also asserted that his decision to follow through on the deal at the original sales price provided a huge windfall for most Twitter shareholders.
But Twitter’s shares fell below $33, or about 40% below Musk’s original purchase price, while the deal was hanging in limbo. That downturn cost shareholders who sold their stock during the uncertainty caused by what the lawsuit alleges was Musk’s deceitful behaviour.