San Francisco: A federal jury has found Elon Musk liable for misleading Twitter (now X) shareholders during his $44 billion acquisition of the social media platform in 2022, according to Bloomberg News.
The verdict concluded that Musk intentionally misrepresented the platform’s number of fake accounts in order to influence the deal’s valuation. The jury determined that two of Musk’s tweets including one stating the acquisition was “temporarily on hold” misled investors, though his comments on a podcast were not considered fraudulent. The court also ruled that Musk did not engage in a deliberate scheme to defraud shareholders.
The trial focused heavily on Musk’s assertions that Twitter had significantly more bots and spam accounts than the approximately 5% disclosed in regulatory filings, which he cited as justification for attempting to withdraw from the acquisition. After Twitter sued to enforce the agreement, Musk eventually proceeded with the deal on the original terms, just before the trial began.
Damages in the class-action lawsuit are expected to be substantial, with the jury awarding shareholders between $3 and $8 per share per day. The decision comes nearly three weeks after the trial commenced on March 2.
The ruling underscores the legal risks tied to public statements made by high-profile executives during major acquisitions, particularly when such statements influence shareholder decisions.