Elon Musk Liable for Twitter Stock Fraud, Awarded $2.1B in Damages
A California jury has found Elon Musk liable for misleading investors in the lead-up to his $44 billion acquisition of Twitter, now known as X. The verdict, delivered Friday in San Francisco, found Musk misled investors with two tweets but did not find he intentionally schemed to defraud them.
The class-action lawsuit, Pampena v. Musk, alleged that Musk knowingly made false and misleading statements about the number of bot accounts on Twitter, driving down the company’s stock price. Jurors determined that Musk was liable for misleading investors with tweets, including one stating the deal was “temporarily on hold” whereas he sought information on bot accounts. However, they found he did not commit fraud with a statement made on a podcast and did not intentionally orchestrate a scheme to defraud investors.
Damages awarded by the jury are estimated to be between $3 and $8 per share for stock held during the relevant period, and an additional $500 million for stock options, totaling approximately $2.6 billion, according to attorneys for the plaintiffs. “What we have is a great example of what you cannot do to the average investor — people that have 401ks, kids, pension funds, teachers, firemen, nurses,” said Joseph Cotchett, an attorney representing the investors, speaking outside the San Francisco courthouse. “That’s what this case was all about. This was not about Musk. It was about the whole operation.”
The trial, which began March 2, featured testimony from former Twitter executives, including former CEO Parag Agrawal and CFO Ned Segal, as well as Musk himself. Musk testified that Twitter’s previous leadership misrepresented the number of bot accounts on the platform, claiming the actual figure was significantly higher than the 5% disclosed to regulators. He characterized the information provided by the former board as “BS.”
Musk’s attempt to withdraw from the acquisition deal led to a legal battle with Twitter, ultimately resolved when he agreed to proceed with the original $54.20 per share purchase price. The lawsuit centered on whether Musk’s public statements were a deliberate attempt to depress the stock price, potentially allowing him to renegotiate a lower purchase price or abandon the deal altogether.
During the trial, Musk’s legal team argued that his statements were based on a good-faith belief that Twitter had misrepresented its bot numbers. They too pointed to previous legal victories for Musk, stating, “We view today’s verdict, where the jury found both for and against the plaintiffs and found no fraud scheme, as a bump in the road. And we look forward to vindication on appeal.”
The verdict comes after Musk rebranded Twitter as X in July 2023, and subsequently merged it with his artificial intelligence company xAI and SpaceX. Linda Yaccarino resigned as CEO of X on July 9, 2025. The platform has undergone significant changes under Musk’s ownership, including the introduction of new features like long-form texts, account monetization, and integration with the Grok chatbot, as well as the removal of features like Circles and NFT profile pictures.
Monte Mann, a business litigation lawyer not involved in the case, stated the verdict “sends a clear message — if you move the market with your words, you own the consequences.” He added, “The law has always prohibited misleading statements. What’s new is the scale and speed. When one person can move billions with a tweet, the consequences of those statements are amplified — and juries are starting to take that seriously.”