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Elon Musk defrauded Twitter Inc. investors when he disparaged the company in 2022 in an effort to buy the social media platform for a lower price than his original $44 billion bid, a jury concluded.\u00a0<\/p>\n
Jurors in federal court in San Francisco found Friday that Musk intentionally misled Twitter shareholders when he tweeted that the social network \u2014 now called X \u2014 had too many fake accounts and tried to back out of the deal. The jury rejected two of the four fraud claims.<\/p>\n
The eight-member panel calculated how much Musk\u2019s statements drove down the company\u2019s stock price for each trading day over a period of about five months. The amount of damages he must pay to individual investors \u2014 which could total hundreds of millions or even billions of dollars \u2014 will be determined at a later date when shareholders submit claims.<\/p>\n
The verdict, following about three days of deliberations, marks a rare defeat in court for the world\u2019s richest person, who has been dubbed \u201cTeflon Elon\u201d for his track record of winning high-stakes legal battles that many expected him to lose.\u00a0<\/p>\n
He prevailed in a 2023 trial over Tesla Inc. investors\u2019 allegations that he misled them in a tweet five years earlier saying he had \u201cfunding secured\u201d to take the electric car-maker private. Musk is a co-founder of Tesla and its chief executive officer.<\/p>\n
Mark Molumphy, a lawyer for the investors, said after the verdict he thinks the damages will amount to $2.6 billion. But even an award that high wouldn\u2019t dent Musk\u2019s net worth, which was $661.1 billion on Friday, according to the Bloomberg Billionaires Index.<\/p>\n
\u201cThis case is much bigger than Twitter, this case goes right to the heart of Wall Street and what\u2019s been going on in recent years,\u201d said Joseph Cotchett, Molumphy\u2019s partner at Cotchett, Pitre & McCarthy LLP. \u201cIt\u2019s a great example of what you cannot do to the average investor.\u201d<\/p>\n
Musk\u2019s lawyers declined to comment in the courtroom. Musk didn\u2019t immediately respond to a request for comment.<\/p>\n
In federal court, the losing side can appeal.<\/p>\n
The jurors heard about two weeks of live testimony from Musk and top Twitter executives at the time, who recalled the turbulent six-month period in 2022 when the serial entrepreneur flip-flopped over whether he would buy the platform, resulting in hard-fought litigation with Twitter\u2019s board of directors to force him to follow through.<\/p>\n
The investors claimed that Musk\u2019s social media posts and public statements \u2014 including a May 13, 2022, tweet stating the deal was \u201ctemporarily on hold\u201d pending a review of the number of bots counted as Twitter users \u2014 was actually part of a deliberate plan to drive down the company\u2019s stock price so he could renegotiate at a better price.<\/p>\n
Molumphy told the jury in his closing argument Tuesday that Musk\u2019s tweets \u201cwere not some innocent mistakes, some stupid tweet that he didn\u2019t consider.\u201d<\/p>\n
\u201cThey were intentional, deliberate, and devised to convey to investors that Twitter was overrun with spam,\u201d Molumphy said.<\/p>\n
Musk took the stand for a whole day, and part of a second, and largely stayed on script in telling the jury he believed that the ex-Twitter executives, including Chief Executive Officer Parag Agrawal and Chief Financial Officer Ned Segal, lied to him and in public financial statements about the prevalence on the platform of spam and fake accounts, known as bots.<\/p>\n
\u201cOf course people were talking about a renegotiation once this bot issue came up,\u201d Musk\u2019s attorney, Michael Lifrak of Quinn Emanuel Urquhart & Sullivan LLP, told the jury in his closing argument. \u201cThere was no secret about that.\u201d<\/p>\n
The stock remained volatile for several months while Musk waffled on following through with the deal, wiping away billions of dollars in Twitter\u2019s market value. When Twitter sued Musk in Delaware for reneging on the purchase in July 2022, the shares reached a low of $32.52, 40% less than Musk\u2019s buyout price.\u00a0<\/p>\n
Musk testified that he only agreed to do the deal at the original price of $54.20 per share because he believed the Delaware judge overseeing Twitter\u2019s lawsuit was biased against him.<\/p>\n
The billionaire argued that his tweet at the center of the lawsuit was very different from walking away from the deal entirely. \u201cI\u2019m not saying I\u2019m not going to do the deal,\u201d he told the jury. \u201cAt no point did I say the deal was canceled.\u201d<\/p>\n
But Musk acknowledged under questioning from a lawyer for investors that the \u201ctemporarily on hold\u201d post was a mistake. \u201cIt may not be my wisest tweet,\u201d he said. \u201cI don\u2019t know if I would call it my stupidest. But if it led to this trial it probably qualifies as such.\u201d\u00a0<\/p>\n
The case is Pampena v. Musk, 22-cv-05937, US District Court, Northern District of California (San Francisco).<\/p>\n
#Musk #misled #Twitter #investors #buyout #jury<\/p>\n","protected":false},"excerpt":{"rendered":"
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