San Francisco: A US jury has found Elon Musk liable for misleading investors during his 2022 acquisition of Twitter, concluding that some of his public statements influenced the company’s stock price during a turbulent period.
Verdict after weeks-long trial
The verdict was delivered by a nine-member jury following nearly three weeks of trial proceedings and four days of deliberations. The case centred on a class-action lawsuit filed by Twitter shareholders who alleged that Musk’s statements caused financial losses.
Jurors determined that two tweets made by Musk in May 2022 were misleading, including one stating that the acquisition deal was “temporarily on hold.” However, they did not find him guilty of intentionally orchestrating a scheme to defraud investors.
Partial liability, not full fraud
While the jury held Musk accountable for misleading investors through specific statements, it stopped short of concluding that he deliberately planned to manipulate the stock market.
The panel also ruled that comments Musk made during a podcast did not amount to fraud, categorising them as personal opinion rather than actionable misrepresentation.
This distinction played a key role in limiting the scope of liability in the case.
Damages awarded to shareholders
The jury awarded damages estimated between $3 and $8 per share per day to affected investors. Lawyers representing the plaintiffs said the total compensation could amount to approximately $2.1 billion (around ₹17,500 crore).
The lawsuit argued that Musk’s statements created uncertainty around the deal, leading to a significant drop in Twitter’s stock price and financial losses for shareholders who sold during that period.
Focus on bot claims and deal uncertainty
A major point of contention during the trial was Musk’s repeated claims that Twitter had a higher number of fake or spam accounts than the 5 per cent disclosed in official filings.
Musk cited these concerns as a reason to pause or reconsider the acquisition. His statements, including the “on hold” tweet, contributed to volatility in the company’s share price.
During testimony, Musk maintained that he believed Twitter’s leadership had misrepresented data regarding fake accounts and that his concerns were legitimate.
Legal battle before acquisition
The case also revisited the dramatic events leading up to the $44 billion takeover. After initially agreeing to acquire Twitter, Musk attempted to back out of the deal, prompting the company to file a lawsuit in Delaware to enforce the agreement.
Shortly before the trial in that case, Musk reversed his decision and proceeded with the acquisition at the original price.
Testimonies from key figures
The trial featured testimonies from several high-profile figures, including former Twitter CEO Parag Agrawal and CFO Ned Segal. Musk himself spent more than a day on the witness stand defending his actions and statements.
Plaintiffs argued that Musk’s tweets were calculated to drive down the stock price, potentially allowing him to renegotiate the deal or exit it altogether. Musk, however, denied any intent to manipulate the market.
Broader implications for markets
Legal experts say the verdict sends a strong message about accountability in public markets, especially for influential figures whose statements can impact investor behaviour.
“This is an important victory, not just for investors but for the integrity of the market,” said one of the plaintiffs’ attorneys, emphasising that even powerful individuals must adhere to securities laws.
Conclusion
The jury’s decision marks a significant moment in corporate and legal scrutiny of high-profile business leaders. While Elon Musk was not found guilty of orchestrating a full fraud scheme, the ruling establishes that his public statements did mislead investors, resulting in substantial financial consequences. The case highlights the growing importance of responsible communication in an era where social media posts can influence global markets.