Elon Musk Found Liable for Fraud in Twitter Shareholder Lawsuit
A U.S. federal jury in San Francisco delivered a significant verdict on Friday, finding Elon Musk liable for defrauding Twitter shareholders. The civil trial centered on allegations that Musk, the world's richest person, made false statements on social media to artificially depress Twitter's stock price, enabling him to renegotiate or abandon a $44 billion acquisition deal in 2022.
Details of the Verdict and Shareholder Claims
The jury determined that Musk was responsible for two specific statements he made after agreeing to purchase Twitter in April 2022. In these statements, Musk questioned the prevalence of fake and spam accounts, known as bots, on the platform. One statement declared the purchase "temporarily on hold" pending confirmation that bots accounted for less than 5% of users, while the other suggested the bot percentage could be "much" higher than 20%, threatening the deal's completion unless Twitter's CEO proved otherwise.
However, jurors did not find sufficient evidence to support a separate claim that Musk engaged in a broader scheme to defraud shareholders. The lawsuit covers investors who sold Twitter shares between May 13 and October 4, 2022, alleging losses due to Musk's actions.
Legal Reactions and Potential Damages
Francis Bottini, a lawyer representing the shareholders, emphasized that Musk's wealth does not exempt him from accountability. "Musk's status as the world's richest man is not a free pass," Bottini stated. "If you're able to move markets with your tweets, you're responsible for the harm you cause to investors." Damages have yet to be calculated, but Bottini estimated they could reach approximately $2.5 billion.
In response, Musk's legal team at Quinn Emanuel Urquhart & Sullivan called the verdict "a bump in the road" and expressed confidence in overturning it on appeal. Michael Lifrak, another lawyer for Musk, argued that the billionaire's concerns about bots were genuine and did not constitute fraud.
Broader Context of Musk's Legal Battles
This case is part of a pattern where Musk has opted to litigate rather than settle shareholder disputes. In 2023, he faced a trial in San Francisco over allegations of defrauding Tesla shareholders with a 2018 tweet about taking the company private, which he won. He also prevailed in Delaware litigation concerning his $139 billion Tesla pay package.
Despite the legal challenges, Musk completed the Twitter acquisition in October 2022 and rebranded it as X. Separately, he is in talks to settle a U.S. Securities and Exchange Commission lawsuit accusing him of delaying disclosure of his initial Twitter stock purchases to buy more at lower prices.
The trial, which began on March 2, concluded with jury deliberations starting on Tuesday, highlighting the intense scrutiny of Musk's business practices and their impact on financial markets.
