Elon Musk bought Twitter in a deal worth $44 billion in October 2022 and renamed the platform X.
A federal jury in California found that mogul Elon Musk misled Twitter shareholders, pushing the company’s stock price down while he was in the process of buying it in a deal worth $44 billion.
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The ruling in the securities class-action lawsuit means that the world’s richest person could be ordered to pay billions of dollars, based on damages calculated by jurors.
Minutes after the verdict was announced, the entrepreneur’s lawyers informed AFP that their client will appeal the decision, describing it as a “setback.”
After a three-week trial in a federal court in San Francisco, which included personal testimony from Musk, the jury found that two tweets published in May 2022 by the CEOs of Tesla and SpaceX contained false statements that were responsible for a sharp drop in Twitter’s stock price.
Investor Giuseppe Pampena had filed the lawsuit on behalf of people who sold Twitter shares between mid-May and early October 2022.
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Musk bought the social media platform at the end of October 2022 and later renamed it X.
The jurors agreed that Musk violated a securities rule that prohibits false and misleading statements that lower a stock’s price, in this case Twitter’s, the ruling document showed.
An attorney for the plaintiffs estimated the damages at approximately $2.6 billion.
Musk, who is almost constantly present at X, did not immediately react to the ruling.
Teflon mogul?
The ruling marks a rare legal defeat for Musk, often called “Teflon-Elon” for his ability to emerge unscathed from lawsuits he is expected to lose.
Indeed, his lawyers reminded AFP of this, noting that a Texas court acquitted him the same day in a separate defamation case.
In 2023, a jury in the same federal court in San Francisco acquitted him within hours of similar charges brought by Tesla shareholders, following his 2018 tweets in which he claimed he had the funding to take the automaker private.
The civil complaint in California accused Musk of pushing Twitter’s stock price down to gain leverage to renegotiate the purchase price or withdraw from the deal entirely, causing people who sold shares to lose money.
Musk tweeted at one point during the process that the acquisition deal had been temporarily put on hold until Twitter management could prove that the proportion of “bots,” fake accounts run by software rather than real users, was as low as the social media platform claimed.
The plaintiffs argued that these statements were part of a scheme designed to pressure the board into accepting a lower price than his original offer, at a time when Tesla’s share price was falling, which meant that Musk would have to sell more of his shares to fund the deal.
Musk abandoned his attempt to withdraw from the purchase of Twitter in late 2022 after the company filed a lawsuit against him for maintaining the contract.
He has since merged the social media platform with his artificial intelligence start-up, xAI, and his private space company SpaceX.
Forbes magazine estimated Elon Musk’s net worth at $839 billion early this month, an amount that is mainly based on his stakes in its portfolio of companies, including Tesla and SpaceX.
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