Elon Musk Held Liable for Defrauding Twitter Investors in Federal Court Ruling
A federal jury in San Francisco has delivered a significant verdict, finding Elon Musk liable for defrauding Twitter investors in 2022. According to a report by Bloomberg News on Friday, the jury concluded that Musk intentionally misled shareholders by disparaging the company, now renamed X, in an effort to secure a lower purchase price for the social media platform.
Details of the Fraud Allegations and Jury Deliberations
Jurors determined that Musk engaged in intentional fraud by claiming Twitter had an excessive number of fake accounts, while simultaneously attempting to withdraw from his $44 billion acquisition deal. However, the court absolved him of some allegations, noting that he did not engage in a deliberate scheme to mislead investors.
The case centered on whether two tweets and comments Musk made on a podcast in May 2022 constituted fraud against shareholders who traded based on his statements. After three days of deliberations, the nine-member jury found that Musk misled investors through two tweets, including one stating the deal was "temporarily on hold", but did not do so via his podcast remarks.
Focus on Fake Accounts and Acquisition Fallout
Much of the trial revolved around Musk's assertions regarding the prevalence of fake accounts on Twitter. He argued that the platform had significantly more bots and spam accounts than the approximately 5% disclosed in regulatory filings, using this as justification to try to back out of the $44 billion deal.
Following Musk's attempt to withdraw, Twitter filed a lawsuit in Delaware to enforce the agreement. Just before the case was set to go to trial, Musk reversed his decision and agreed to proceed with the acquisition on the original terms.
Verdict Timeline and Expected Damages
The verdict came nearly three weeks after the trial began on March 2. While damages in this class-action case have yet to be finalized, they are anticipated to run into billions of dollars. The jury awarded shareholders between about $3 and $8 per share per day, highlighting the financial impact of Musk's actions.
This ruling underscores the legal consequences of misleading statements in high-stakes corporate transactions, particularly in the tech industry where investor trust is paramount.
