A US federal jury found Elon Musk liable on Friday over allegations that he defrauded Twitter shareholders by trying to drive down the social media company’s stock price so he could renegotiate or walk away from a $44 billion acquisition in 2022.
The verdict by a jury in federal court in San Francisco came in a closely watched civil trial in which Musk, the world’s richest person, was accused of falsely claiming on social media that Twitter did not report how many fake and spam accounts, known as bots, were on its platform.
The damages have not yet been calculated, but Francis Bottini, a lawyer for the shareholders, estimated they could total about $2.5 billion.
“Musk’s status as the richest man in the world is not a free pass,” Bottini said in a statement. “If you are able to move markets with your tweets, you are responsible for the damage you cause to investors.”
In a joint statement, Musk’s attorneys 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 March 2 and jurors began deliberating Tuesday.
Musk has often chosen to fight shareholders in court rather than reach a settlement.
This included a 2023 trial in San Francisco over whether he defrauded Tesla shareholders who claimed they suffered losses after he falsely claimed in 2018 that he had “funding secured” to take the electric car company private, and litigation in Delaware over his $139 billion Tesla pay package. Musk won both cases.
Musk finally completed the purchase of Twitter in October 2022 and renamed it X.
Musk responsible for two statements
Twitter shareholders questioned three statements Musk made shortly after agreeing to buy Twitter in April 2022, where he questioned whether the company was overrun by bots.
Jurors found Musk responsible for two of the statements.
One said the purchase was “temporarily on hold” pending confirmation that bots accounted for less than 5% of users. The other said the percentage of bots could be “much” higher than 20%, and that the acquisition could not go ahead unless Twitter’s CEO demonstrated that the percentage was less than 5%.
Jurors also said the shareholders did not prove a separate claim that Musk participated in a scheme to defraud them.
Michael Lifrak, Musk’s lawyer, responded that the billionaire’s concern about bots was real and that talking about the issue did not prove that Musk was engaged in or intended to commit fraud.
The lawsuit covers investors who claimed to sell Twitter shares at prices that Musk artificially depressed between May 13 and October 4, 2022.
Musk is separately in talks to resolve a civil lawsuit from the U.S. Securities and Exchange Commission that accuses him of waiting too long in 2022 to disclose his initial Twitter purchases so he could buy more at low prices before investors saw what he was doing.
In February, Musk’s rocket and space exploration company, SpaceX, bought his artificial intelligence company xAI, which housed X. The purchase created the most valuable private company in the world, worth about $1.25 trillion at the time.
