A United States jury has delivered a significant verdict, finding that Elon Musk deliberately misled investors by driving down Twitter's share price in the months leading up to his monumental $44 billion takeover of the social media platform. However, the tech billionaire, who holds the title of the world's richest person, was cleared of certain fraud allegations in this civil trial held in San Francisco.
Core of the Legal Battle
The case revolved around a class-action lawsuit filed just before Mr Musk assumed control of Twitter, which he subsequently rebranded as X. Jurors were tasked with determining whether two tweets and comments made by Mr Musk on a podcast in May 2022 constituted intentional fraud against Twitter shareholders. These investors sold their shares based on his public statements, leading to substantial financial losses.
While the exact amount of damages remains undetermined, it is anticipated to reach into the billions of dollars, affecting thousands of shareholders, including many institutional investors. Mr Musk's fortune, estimated at approximately $814 billion largely tied to Tesla shares, may face a significant impact from this ruling.
Allegations of Bot Misrepresentation
A central element of the trial focused on Mr Musk's assertions that Twitter had underreported the prevalence of fake and spam accounts, commonly referred to as bots, on its platform. Evidence presented in court included a tweet from May 2022 where Mr Musk declared that his takeover "cannot go forward" until Twitter's chief executive could verify that the bot percentage was below 5%.
During closing arguments, the shareholders' lawyer, Mark Molumphy, accused Mr Musk of trashing the company, its executives, and tanking the stock. In contrast, Michael Lifrak, representing Mr Musk, argued that the billionaire's concerns about bots were genuine and that voicing these issues did not equate to fraud or fraudulent intent.
Takeover Turmoil and Legal Maneuvers
Mr Musk leveraged the alleged misrepresentation of fake accounts as grounds to retreat from the acquisition deal. After his attempt to back out, Twitter initiated legal action to compel him to honor the original agreement. Ultimately, Mr Musk conceded, paying the initially promised sum and finalizing the purchase of Twitter in October 2022.
In a separate legal development, Mr Musk is currently engaged in discussions to settle a civil lawsuit filed by the US Securities and Exchange Commission. This lawsuit alleges that he delayed disclosing his initial purchases of Twitter shares in 2022, allowing him to acquire more at lower prices before investors became aware of his actions.
