A US federal jury has found Elon Musk liable for Twitter fraud, concluding that the billionaire defrauded shareholders by attempting to drive down the social media company’s stock price during his $44 billion takeover in 2022.
The verdict, delivered Friday by a jury in San Francisco federal court, came after a closely watched civil trial. Shareholders accused Musk 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 approximately $2.5 billion.
“Musk’s status as the world’s richest man is not a free pass,” Bottini said in a statement. “If you’re able to move markets with your tweets, you’re responsible for the harm you cause to investors.”
Musk’s Legal Team Vows Appeal
In a joint statement, Musk’s lawyers at Quinn Emanuel Urquhart & Sullivan called the verdict “a bump in the road. And we look forward to vindication on appeal.”
The civil trial began on March 2, and jurors began deliberating on Tuesday before reaching their decision.
Musk has frequently chosen to battle shareholders in court rather than settle. This approach previously yielded wins in a 2023 trial over claims he defrauded Tesla shareholders with his “funding secured” tweet, and in Delaware litigation over his $139 billion Tesla pay package.
Two Statements Found Fraudulent
Shareholders challenged three statements Musk made shortly after agreeing in April 2022 to buy Twitter. Jurors found Musk liable for two of them:
- A statement that the purchase was “temporarily on hold” pending confirmation that bots represented less than 5 per cent of users.
- A statement that the percentage of bots could be “much” higher than 20 per cent, and that the takeover could not proceed unless Twitter’s CEO proved otherwise.
Jurors determined that shareholders did not prove a separate claim that Musk engaged in a broader scheme to defraud them.
Defence Argued Genuine Concern About Bots
Michael Lifrak, a lawyer for Musk, argued that the billionaire’s concern about bots was genuine and that speaking out about the issue did not constitute fraud or intent to defraud.
The lawsuit covers investors who sold Twitter shares at prices Musk allegedly artificially depressed between May 13 and October 4, 2022. Musk ultimately completed his purchase of Twitter in October 2022 and renamed the platform X.
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Musk is separately in talks to settle a US Securities and Exchange Commission civil lawsuit accusing him of waiting too long in 2022 to disclose his initial Twitter purchases. The SEC alleges this delay allowed him to buy more shares at lower prices before investors became aware of his accumulation.
In February, Musk’s rocket and space exploration company, SpaceX, bought his artificial intelligence company, xAI, which housed X. The purchase made SpaceX the world’s most valuable private company at the time, valued at approximately $1.25 trillion.
