Musk was found liable for defrauding investors by deliberately driving down Twitter's stock price leading up to his 2022 acquisition of the social media company for 44 billion dollars.
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Elon Musk has been found to have mislead investors by 'deliberately driving down' Twitter's stock price ahead of his $44 billion acquisition deal, a jury has found.
Elon Musk's public statements posted to Twitter, alongside comments suggesting he was 'considering backing out' of the deal, were seen to drive down the company’s share price ahead of his purchase, a jury concluded on Friday.
The verdict means the Tesla founder could be ordered to pay out up to $2.6billion, according to damages calculated by jurors.
The case, heard in the San Francisco federal court, saw jurors agree unanimously against Musk, but absolved him of some fraud allegations, finding that he did not “scheme” to mislead investors.
Musk was sued by a group of investors who sold Twitter shares between mid-May of 2022 and early October of that year, just before Musk took control of Twitter, which he later renamed X.
Jurors said that while Musk was liable for misleading investors with two tweets – including one that said the Twitter deal was “temporarily on hold" – he did not do so in a statement he made on a podcast and that he did not intentionally “scheme” to defraud investors.
Much of the trial focused on Musk’s claims about the number of bots on Twitter. Musk testified that Twitter had a much higher number of fake and spam accounts than the 5 per cent it disclosed in regulatory filings.
He used what he called Twitter’s misrepresentation of the number of fake accounts on its service as a reason to pull out of the purchase.
In late 2022, Twitter went to court to force Musk to uphold the contract. Just before that case was scheduled to go to trial, he reversed course again and agreed to pay what he had originally promised.
The verdict found Musk's statements had artificially lowered the stock price range of Twitter by about 8 dollars per share to 3 dollars per share.
The jury awarded shareholders damages, which the plaintiffs' lawyers said amounts to about 2.1 billion dollars in stock and another 500 million dollars in options. Musk's fortune is currently estimated at about 814 billion dollars, much of it tied up in Tesla shares.