A US federal jury found Elon Musk liable on Friday for charges that he defrauded Twitter shareholders by trying to drive down the social media company’s stock price so he could renegotiate or walk away from a $44 billion takeover in 2022.
The verdict by a San Francisco federal court jury came in a closely watched civil trial in which Musk, the world’s richest person, was accused of falsely claiming on social media that Twitter had underestimated the number of fake accounts and spam accounts, called bots, on its platform.
The damages have not yet been calculated, but Francis Bottini, the shareholders’ lawyer, estimates that they could amount to around $2.5 billion.
“Musk’s status as the world’s richest man is not a free pass,” Bottini said in a statement. “If you manage to move the markets with your tweets, you are responsible for the harm you cause to investors.”
In a joint statement, Musk’s lawyers, Quinn Emanuel Urquhart & Sullivan, called the verdict “a bump in the road.” And we look forward to vindication on appeal.”
The civil trial began March 2, and jurors began deliberating Tuesday.
Musk has often chosen to fight shareholders in court rather than fix the problem.
That included a 2023 trial in San Francisco over whether he defrauded Tesla shareholders who said he suffered losses after falsely claiming in 2018 that he “obtained financing” to take the electric car company private, and litigation in Delaware over his $139 billion pay package for Tesla. Musk won both cases.
Musk finally completed his purchase of Twitter in October 2022 and renamed it X.
Musk responsible for two statements
Twitter shareholders took issue with three statements Musk made shortly after agreeing to buy Twitter in April 2022, in which he questioned whether the company was being overrun by bots.
Jurors found Musk responsible for two of those statements.
One said the purchase was “temporarily paused” pending confirmation that bots accounted for less than 5% of users. The other said the percentage of bots could be “well” above 20% and that the takeover could not happen unless Twitter’s chief executive proved the percentage was below 5%.
Jurors also said the shareholders failed to prove a separate claim that Musk engaged in a scheme to defraud them.
Michael Lifrak, Musk’s lawyer, countered that the billionaire’s concerns about robots were real and that talking about the problem did not demonstrate that Musk had committed or intended to commit fraud.
The lawsuit involves investors who claimed to sell Twitter shares at prices artificially depressed by Musk between May 13 and October 4, 2022.
Musk is separately in talks to settle a civil lawsuit with the U.S. Securities and Exchange Commission accusing him of waiting too long into 2022 to disclose his initial purchases of Twitter so he could buy more cheaply before investors saw what he was doing.
In February, Musk’s rocket and space exploration company SpaceX purchased his artificial intelligence company xAI, which housed X. The purchase created the world’s most valuable private company, worth about $1.25 trillion at the time.
