A San Francisco jury on Friday found Elon Musk liable for misleading investors in the lead-up to his $44 billion acquisition of Twitter, now known as X, though it stopped short of a full fraud conviction. The verdict, delivered after three days of deliberation, centers on statements Musk made in May 2022 regarding the potential number of bot accounts on the platform.
Jurors determined that Musk misled investors with at least two tweets, including one declaring the deal was “temporarily on hold” pending verification of bot statistics. Although, they found he did not intentionally “scheme” to defraud investors, nor did his comments during a podcast constitute misleading statements. The civil trial, initiated as a class-action lawsuit shortly before Musk finalized the Twitter purchase, hinged on whether his public statements influenced shareholders to sell their stock at a depressed price.
The jury’s decision does not immediately translate into a specific monetary penalty for Musk. As a class-action case, damages will be assessed on a per-share basis, with jurors awarding between $3 and $8 per share for each day following the misleading statements. This suggests a potential payout in the billions of dollars to thousands of shareholders, many of whom are institutional investors, according to reports from the Associated Press and CNBC.
Much of the trial revolved around Musk’s claims that Twitter significantly underestimated the prevalence of bot and spam accounts. He argued that the platform’s reported 5% figure was inaccurate and used this discrepancy as justification for attempting to withdraw from the acquisition agreement. Twitter subsequently sued to enforce the original deal, and Musk ultimately reversed course, completing the purchase at the agreed-upon price.
The legal battle unfolded against a backdrop of significant volatility in Twitter’s stock price. Musk’s initial offer to buy the company for $54.20 per share was met with skepticism, and the stock price fluctuated wildly as he publicly questioned the deal and raised concerns about bot activity. According to a report by Reuters, the jury’s findings confirm that Musk’s actions directly impacted investor confidence.
Musk’s personal fortune, currently estimated at approximately $814 billion, is largely tied to his ownership stake in Tesla. The financial implications of the jury’s verdict remain to be seen, but the potential for a multi-billion dollar payout could represent a significant financial burden. The New York Times reported that Musk did not immediately comment on the verdict following the announcement.
The case is not yet closed. While the jury has reached a verdict on liability, the process of determining the total damages owed to shareholders is ongoing. Further legal proceedings are expected to determine the precise amount Musk will be required to pay.
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