San Francisco’s federal jury found Elon Musk guilty of defrauding Twitter shareholders with his misleading tweets.
The tweets were done during his tumultuous $44 billion acquisition of the platform.
The verdict is highly significant as this can impact Musk’s status of the world’s richest man.
In a three-week trial, the nine-person jury unanimously ruled that two tweets posted by Musk in May 2022 consisted of materially false statements that artificially decreased Twitter’s share price.
Investors claimed that they sold shares at deflated prices after Musk suggested the deal was “temporarily on hold” due to concerns about fake accounts and bots on the platform.
In a single session, this tweet drove down Twitter’s stocks by 10 per cent.
Although jurors found Musk to have broken securities laws that prohibit false statements that cause stock prices to fall, they also cleared him of other fraud charges, ruling that he didn’t engage in a “scheme” to mislead investors.
Plaintiff’s attorneys estimated damages at around $2.6 billion, with jurors estimating that affected shareholders should receive $3 and $8 per share for each day of the class period.
The investors who sold Twitter shares between mid-May and early October 2022 filed the lawsuit against Musk.
Following the verdict, Musk’s legal team planned to appeal, alleging the verdict was a “bump in the road.”
In a statement, attorneys with Quinn Emanuel said they looked forward to “vindication on appeal.”
The verdict is a rare legal setback for Musk, who in 2023 was acquitted by the same court in a similar case filed by Tesla shareholders over Musk’s 2018 tweets about taking the electric carmaker private.
