Musk found liable to Twitter shareholders in fraud lawsuit over $44b takeover

A United States federal jury found Elon Musk liable on Friday for claims he defrauded Twitter shareholders by trying to drive down the social media company’s stock price so he could renegotiate or back out of a $44 billion takeover in 2022. The verdict, delivered in a San Francisco federal court, came in a closely watched civil trial where Musk, the world’s richest person, was accused of falsely claiming on social media that Twitter underreported the number of fake and spam accounts, known as bots, on its platform. Damages have yet to be calculated, but Francis Bottini, a lawyer for the shareholders, estimated they could total about $2.5b. “Musk’s status as the world’s richest man is not a free pass,” Bottini said. “If you’re able to move markets with your tweets, you’re responsible for the harm you cause to investors.” Read: Musk first person worth $700b In a joint statement, Musk’s lawyers at Quinn Emanuel Urquhart & Sullivan called the verdict “a bump in the road” and said they looked forward to vindication on appeal. The civil trial began on March 2, with jurors starting deliberations on Tuesday. Musk has often chosen to fight shareholder lawsuits in court rather than settle. This includes a 2023 trial in San Francisco over whether he defrauded Tesla shareholders after claiming in 2018 he had “funding secured” to take the company private, and litigation in Delaware over his $139b Tesla pay package. He won both cases. Musk completed his purchase of Twitter in October 2022 and later renamed it X. Musk liable for two statements Twitter shareholders challenged three statements Musk made shortly after agreeing in April 2022 to buy the company, in which he questioned whether the platform was overrun with bots. Jurors found Musk liable for two of those statements. One said the purchase was “temporarily on hold” pending confirmation that bots represented less than 5% of users. The other claimed the percentage of bots could be “much” higher than 20% and that the takeover could not proceed unless Twitter’s chief executive proved the figure was below 5%. Jurors said the shareholders did not prove a separate claim that Musk engaged in a broader scheme to defraud them. Read More: Elon Musk confirms xAI is developing fully AI-generated video game set for release by end of 2026 Musk’s lawyer, Michael Lifrak, argued that concerns about bots were genuine and that speaking about them did not amount to fraud. The lawsuit covers investors who said they sold Twitter shares at prices Musk artificially depressed between May 13 and October 4, 2022. Musk is also in talks to settle a US Securities and Exchange Commission civil lawsuit accusing him of delaying disclosure of his initial Twitter stake in 2022, allowing him to buy more shares at lower prices. In February, Musk’s SpaceX acquired his artificial intelligence firm xAI, which houses X, creating the world’s most valuable private company, valued at about $1.25 trillion at the time.