A federal jury in San Francisco has determined that Elon Musk intentionally misled Twitter shareholders in an effort to lower the purchase price of the platform during his acquisition attempt in 2022.
The eight-member jury concluded that Musk’s tweets, particularly a May 13, 2022 post regarding a “temporary suspension” of the deal due to purportedly excessive fake accounts, were part of a deliberate strategy to reduce Twitter’s stock price and renegotiate the acquisition terms.
While the jury rejected two of the four fraud allegations, they upheld the remaining two.
The exact amount of damages will be established later, as shareholders are expected to file individual lawsuits. Investor attorney Mark Molamfi estimates that the total compensation could reach $2.6 billion.
Despite this potential liability, such a sum is unlikely to significantly impact Musk’s wealth, which was reported at $661.1 billion as of March 20.
Musk initially proposed the $44 billion acquisition of Twitter but later expressed doubts publicly, raising concerns about bots and fake accounts, and questioning the company’s reported data.
During this period, Twitter’s stock price fell to $32.52, approximately 40% below the acquisition price. Following Twitter’s legal action, Musk ultimately agreed to the original price of $54.20 per share.
In court, Musk explained that he believed the Delaware judge was biased against him. He claimed that former Twitter executives misled him and provided false information regarding the number of bots on the platform.
“Maybe it’s not my wisest tweet. I don’t know if I’d call it the dumbest. But if it led to this lawsuit, then I suppose it could be classified that way,” Musk commented on his controversial tweet about the “suspension” of the deal.
He maintained that he never officially stated that the deal was suspended.
“This case is much bigger than Twitter; it directly involves Wall Street and what has transpired in recent years. It serves as a prime example of what should not be done to an average investor,” said investor attorney Joseph Cotchett.
Musk’s legal team plans to appeal the jury’s decision.
Following his acquisition of Twitter in 2022, Musk stated that the platform’s commitment to content moderation “remains absolutely unchanged.” However, he also announced significant staff reductions due to losses exceeding $4 million per day, offering three months of severance to those laid off.
A jury has found Elon Musk liable for misleading Twitter shareholders during his acquisition negotiations, potentially leading to significant financial repercussions. The case highlights broader implications for investor protections and corporate governance.