US Jury Accuses Elon Musk of Misrepresentation in Twitter Deal

A federal jury in San Francisco has concluded that Elon Musk misled Twitter shareholders during his 2022 takeover of the social media platform. The jury determined that Musk attempted to manipulate Twitter’s stock price, potentially paving the way for renegotiating or abandoning the $44 billion (US$) acquisition deal. The decision marks a significant development in the high-profile legal case, though the damages will be determined at a later date.

Disputed Bot Claims at the Center

The civil trial, which commenced on March 2, focused on Musk’s public claims questioning the number of fake and spam accounts, known as bots, on Twitter’s platform. Shareholders alleged that Musk falsely claimed Twitter underreported these figures to justify derailing the agreement. The jury reviewed statements Musk made via social media, including a May 17, 2022, tweet in which he claimed the deal "cannot go forward" unless Twitter’s then-chief executive could confirm that spam accounts comprised less than 5% of users.

"He trashed the company. Trashed the executives. And tanked the stock", said Mark Molumphy, the lawyer representing Twitter shareholders, during his closing arguments.

Musk’s lawyer, Michael Lifrak, countered that the billionaire’s concerns were legitimate, asserting that Musk’s statements about bots did not demonstrate intent to commit fraud. Despite this defense, the jury sided with shareholders who alleged financial losses from Musk’s actions, particularly those who sold shares at deflated prices between May 13 and October 4, 2022.

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A History of Legal Battles

Musk is no stranger to legal disputes with shareholders. The verdict comes after Musk successfully defended himself in previous high-profile cases, including a 2023 trial regarding allegations of misleading Tesla shareholders with his "funding secured" tweet in 2018. He also faced challenges over his $139 billion (US$) Tesla compensation package, but ultimately prevailed in court.

In this latest case, however, the jury’s decision highlights the scrutiny Musk continues to face over his public statements and their potential impact on financial markets.

Ongoing SEC Investigation

Beyond this verdict, Musk is reportedly in talks to settle a separate lawsuit with the US Securities and Exchange Commission (SEC). That case accuses him of waiting too long in 2022 to disclose his early purchases of Twitter shares, allegedly allowing him to acquire more stock at lower prices before investors became aware of his intentions.

Twitter’s Transformation Post-Acquisition

Despite the controversy, Musk completed the acquisition of Twitter in October 2022, rebranding the platform as "X." Since then, it has been integrated into his space exploration company, SpaceX. In February, SpaceX acquired Musk’s artificial intelligence company, xAI, creating the world’s most valuable private company, reportedly worth $1.25 trillion (US$).

The trial’s outcome underscores the challenges Musk has faced in navigating high-stakes business deals and legal disputes, with further developments anticipated as damages and penalties are determined.

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