A federal jury in California found Friday that tech tycoon Elon Musk misled Twitter shareholders, driving down the company’s share price as he was poised to buy it in a $44 billion deal.
According to jurors’ calculations of damages, the richest person in the world may be required to pay billions of dollars as a result of the class action securities lawsuit’s verdict.
The entrepreneur’s attorneys told AFP minutes after the ruling that their client will file an appeal, calling it a “setback.”
Following a three-week trial in a federal court in San Francisco, during which Elon Musk testified in person, the jury concluded that two tweets made by the CEO of SpaceX and Tesla in May 2022 contained misleading statements that caused Twitter’s share price to plummet.
The lawsuit was brought by investor Giuseppe Pampena on behalf of individuals who sold Twitter shares between mid-May and early October 2022.
After acquiring the social media site in late October 2022, Musk changed its name to X.
According to the verdict form, jurors concurred that Musk had broken a securities rule that prohibits making false and deceptive claims that lower a stock price, in this case Twitter’s.
The plaintiffs’ lawyer calculated the damages to be almost $2.6 billion.
Elon Musk, who is almost always present on X, did not respond to the decision immediately.
The ruling represents a rare legal setback for Musk, who is frequently referred to as “Teflon Elon” due to his propensity to win lawsuits that he was predicted to lose.
In fact, his attorneys reminded AFP of this history, pointing out that he was exonerated in a different defamation lawsuit that same day by a Texas judge.
After he tweeted in 2018 that he had the money to take the carmaker private, a jury in the same federal court in San Francisco cleared him within hours of similar accusations brought by Tesla shareholders in 2023.
According to the California civil lawsuit, Elon Musk drove down Twitter’s stock price in order to obtain leverage to either renegotiate the purchase price or back out of the agreement entirely, which resulted in losses for those who sold shares.
At one point in the process, Musk tweeted that the acquisition proposal was put on hold until Twitter officials could demonstrate that the ratio of “bots”—fake accounts created by software rather than actual users—was as low as the social media company claimed.
The plaintiffs argued that these remarks were a part of a plan to coerce the board of directors into accepting a price that was less than what he had originally offered, at a time when Tesla’s stock price was declining and Musk would need to sell more of his shares to finance the transaction.
In late 2022, Musk gave up on trying to avoid purchasing Twitter after the company sued him to enforce the agreement.
Since then, Elon Musk has combined the social media site with his private space exploration company SpaceX and his artificial intelligence venture xAI.
Forbes magazine early this month estimated Elon Musk’s net worth at $839 billion, a figure based primarily on his stakes in his portfolio of companies, including Tesla and SpaceX.
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