A federal jury on Friday found Elon Musk liable for defrauding Twitter shareholders by attempting to drive down the company’s stock price so he could renegotiate or back out of his $44 billion takeover in 2022.
The closely watched civil trial centered on Musk’s claims on social media that Twitter had underreported the number of fake and spam accounts, known as bots, on its platform.
Damages have not yet been determined, but lawyers for the shareholders estimated they could total around $2.5 billion. “Musk’s status as the world’s richest man is not a free pass,” said Francis Bottini, a lawyer representing the shareholders. “If you’re able to move markets with your tweets, you’re responsible for the harm you cause to investors.”
Musk’s lawyers called the verdict “a bump in the road” and said they looked forward to vindication on appeal.
The trial, which began on March 2, saw jurors consider three statements Musk made after agreeing to buy Twitter in April 2022. He was found liable for two of the statements, which questioned whether bots represented less than 5% of Twitter users. Jurors did not find sufficient evidence to support a separate claim that Musk engaged in a scheme to defraud shareholders.
Michael Lifrak, a lawyer for Musk, said his client’s concerns about bots were genuine and that raising the issue publicly did not constitute fraud.
The lawsuit covers investors who claimed they sold Twitter shares at prices Musk allegedly depressed between May 13 and October 4, 2022. Musk completed his purchase of Twitter in October 2022 and rebranded the platform as X.
Musk is also negotiating a separate settlement with the US Securities and Exchange Commission over accusations that he delayed disclosing his Twitter purchases in 2022 to buy more shares at lower prices.
In February, SpaceX, Musk’s space exploration company, acquired his AI firm xAI, which housed X, creating a private company valued at about $1.25 trillion.
