Jury Finds Musk Misled Twitter Investors Before Buyout

A U.S. jury has ruled that Elon Musk misled Twitter investors during his 2022 takeover of the social media platform, marking a significant legal development in one of the most closely watched tech deals in recent years.

The verdict, delivered in federal court in San Francisco, found that Musk’s public statements particularly his tweets about the number of fake accounts on Twitter were misleading and had a direct impact on the company’s stock price.

The case centred on whether Musk’s comments were part of an effort to renegotiate or withdraw from his $44 billion acquisition of Twitter, which he ultimately completed later that year.

At the heart of the lawsuit were Musk’s posts in May 2022, including one claiming the deal was “temporarily on hold” pending verification of spam and bot accounts on the platform.

Investors argued that these statements created uncertainty around the deal and caused Twitter’s share price to drop, leading some shareholders to sell their holdings at a loss. 

Jurors agreed that some of Musk’s statements were misleading, concluding that they influenced market behaviour and investor decisions during the acquisition process.

While the jury found Musk liable for misleading investors, it did not conclude that he carried out a broader, coordinated fraud scheme.

In particular, jurors determined that certain statements including comments made outside of social media did not amount to deliberate fraud. 

The ruling represents a partial win for both sides, establishing accountability for specific statements while stopping short of confirming a wider manipulation strategy.

The lawsuit was brought by a group of Twitter shareholders who accused Musk of intentionally driving down the company’s value by publicly criticising it during negotiations.

They argued that Musk’s repeated claims about bots and fake accounts were designed to secure a lower purchase price or exit the deal entirely. 

Musk, for his part, maintained that his concerns about spam accounts were genuine and denied any intention to mislead investors.

The jury’s decision could expose Musk to billions of dollars in damages, depending on how losses to investors are calculated.

Some estimates suggest potential liabilities could reach into the multi-billion-dollar range, making it one of the most significant securities-related verdicts involving a tech executive. 

Musk’s legal team is expected to appeal the ruling.

The case underscores the growing scrutiny faced by high-profile executives over their public statements on social media, particularly when those statements have the potential to move financial markets.

Legal experts say the verdict could have a chilling effect on how executives communicate publicly, especially during major corporate transactions where investor confidence is highly sensitive.

Musk completed the acquisition of Twitter in October 2022 and later rebranded the platform as X, but the legal fallout from the deal continues to unfold years later.