Elon Musk was held responsible by a U.S. federal jury on Friday for allegedly defrauding Twitter shareholders by attempting to lower the company’s stock price to renegotiate or withdraw from a $44 billion takeover in 2022.
The world’s richest person, Elon Musk, was charged with falsely alleging on social media that Twitter underreported the number of bogus and spam accounts, or “bots,” on its platform.
The jury’s decision in this keenly anticipated civil trial took place in a federal court in San Francisco.
Although the exact amount of damages has not yet been determined, shareholder attorney Francis Bottini predicted that they might be around $2.5 billion.
In a statement, Bottini added, “Musk’s position as the richest man in the world is not a free pass.” “If you’re able to move markets with your tweets, you’re responsible for the harm you cause to investors.”
Musk’s attorneys at Quinn Emanuel Urquhart & Sullivan referred to the decision as “a bump in the road” in a joint statement. And we anticipate being upheld on appeal.
Jurors started deliberations on Tuesday after the civil trial started on March 2.
Instead of settling, Musk has frequently opted to fight shareholders in court.
This included litigation in Delaware over his $139 billion Tesla compensation package, a trial in San Francisco in 2023 to determine whether he defrauded Tesla, and shareholders who claimed to have suffered losses after he made a false claim in 2018 that he had “funding secured” to take the electric car company private.
Musk prevailed in both cases.
In October 2022, Musk finally bought Twitter and changed its name to X.
MUSK IS ACCOUNTABLE FOR TWO STATEMENTS
Shortly after Musk agreed to purchase Twitter in April 2022, he questioned if the company was dominated by bots. Three of these remarks were contested by Twitter shareholders.
Musk was held accountable by the jury for two of the remarks.
According to one, the acquisition was “temporarily on hold” until it was confirmed that less than 5% of users were bots.
According to the other, the percentage of bots may be “much” more than 20%, and the takeover could not proceed unless the CEO of Twitter demonstrated that the percentage was less than 5%.
Additionally, the jurors found that the shareholders had not proven a separate allegation that Musk had conspired to deceive them.
Musk’s attorney, Michael Lifrak, retorted that the billionaire’s worries about bots were legitimate and that raising the issue did not prove Musk had committed or planned to commit fraud.
Investors who allegedly sold Twitter shares at prices Musk fraudulently lowered between May 13 and October 4, 2022, are the subject of the case.
Musk is in separate negotiations to resolve a civil case filed by the U.S. Securities and Exchange Commission, which alleges that he delayed disclosing his initial acquisitions of Twitter in 2022 to purchase more at discounted rates before investors discovered what he was doing.
Musk’s artificial intelligence firm, xAI, which housed X, was acquired by SpaceX, his rocket and space exploration business, in February.
With a valuation of roughly $1.25 trillion at the time, the acquisition produced the most valuable private firm in the world.
