Elon Musk’s Controversial Tweets Lead to Legal Battle Over Twitter Stock
In a high-profile legal case, Elon Musk has been found liable for misleading investors, impacting Twitter’s stock value. The jury’s decision came amidst intense scrutiny over Musk’s communications and their effect on the financial markets.
San Francisco: The recent jury verdict in San Francisco has concluded that Elon Musk is responsible for misleading investors by negatively affecting Twitter’s stock price before acquiring the social media giant for $44 billion in 2022. Although he faced allegations of fraud, Musk was cleared of intentionally scheming to deceive investors.
The civil case revolved around a class-action lawsuit initiated just as Musk was set to assume control of Twitter, which he later renamed X. Jurors were tasked with evaluating the impact of two tweets and a podcast statement by Musk in May 2022 to determine if these actions amounted to deliberate fraud against Twitter shareholders.
After nearly four days of deliberation, the jury reached a decision almost three weeks into the trial, which began on March 2. They concluded that while Musk’s tweets, including one claiming the Twitter deal was “temporarily on hold,” misled investors, his podcast statement was not part of a fraudulent scheme.
Shareholders were awarded damages ranging from approximately $3 to $8 per stock per day, totaling about $2.1 billion, according to the plaintiffs’ attorneys. Musk’s current net worth is estimated at around $814 billion, primarily linked to his Tesla holdings.
Joseph Cotchett, representing the plaintiffs, stated, “It’s an important victory, not just for investors of Twitter, but for the public markets.” He emphasized that wealth and power do not exempt individuals from the law.
Musk’s legal team refrained from commenting as they exited the courtroom.
The trial largely focused on Musk’s allegations regarding Twitter’s bot accounts. Musk argued that the number of fake and spam accounts was significantly higher than the 5% disclosed in regulatory filings, which he cited as a reason to reconsider the acquisition.
When Musk attempted to withdraw from the deal, Twitter pursued legal action in Delaware to enforce the original terms. Just before the trial could proceed, Musk reversed his decision and agreed to the original purchase terms.
The core issue of the case was whether Musk’s May 13, 2022, tweet, which suggested the Twitter deal was “temporarily on hold,” was a deliberate attempt to lower Twitter’s stock value. The jury determined that while Musk misled investors with tweets, his podcast remarks were opinions, absolving him of scheming to manipulate stock prices.
Throughout the nearly three-week trial, testimonies from former Twitter executives, including ex-CEO Parag Agrawal and CFO Ned Segal, were heard. Musk himself testified, asserting that Twitter misrepresented the number of fake accounts, and claimed the information provided was inadequate.
Musk also argued that his commitment to the initial purchase price was beneficial to most Twitter shareholders. However, Twitter’s stock dropped to $33, nearly 40% below Musk’s proposed purchase price, affecting shareholders who sold amidst the uncertainty caused by Musk’s actions.
The plaintiffs claimed that Musk’s tweets were not accidental but strategically aimed to decrease Twitter’s stock value to renegotiate the deal at a lower price or withdraw entirely. The plaintiffs’ attorney, Mark Molumphy, argued, “He knew what he was doing,” urging the jury to hold Musk accountable for the financial losses suffered by investors.
Musk’s legal team repeatedly sought a mistrial, arguing that hostility towards Musk in San Francisco would prevent a fair trial. This case marks another instance where Musk has faced legal challenges over his social media conduct, including a previous trial over a proposed Tesla buyout.
This article was originally written by www.npr.org
