Musk Found Liable to Shareholders in Fraud Suit over $44 Billion Takeover

A US federal jury on Friday found Elon Musk liable for defrauding Twitter shareholders by allegedly attempting to drive down the company’s stock price to renegotiate or withdraw from his $44 billion takeover in 2022.

The verdict, handed down in San Francisco federal court, followed a high-profile civil trial in which Musk, the world’s richest person, faced allegations of falsely claiming on social media that Twitter underreported the number of spam and fake accounts — known as bots — on its platform.

“Musk’s status as the world’s richest man is not a free pass,” said attorney Bottini. “If you can move markets with your tweets, you’re responsible for the harm caused to investors.”

Musk’s lawyers at Quinn Emanuel Urquhart & Sullivan described the ruling as “a bump in the road” and said they expect vindication on appeal.

The trial began on March 2, with jurors deliberating starting Tuesday. Musk has historically opted to fight shareholder lawsuits in court rather than settle, including prior cases involving Tesla shareholders and his $139 billion pay package, in which he was ultimately victorious.

Twitter shareholders challenged three of Musk’s statements made shortly after his April 2022 agreement to buy the company, questioning whether bots dominated the platform. Jurors found him liable for two statements: one claiming the purchase was “temporarily on hold” pending verification that bots comprised under 5% of users, and another suggesting bots could exceed 20%, making the takeover contingent on confirmation from Twitter’s CEO. A separate claim of a broader scheme to defraud shareholders was not proven.

Musk’s lawyer, Michael Lifrak, argued that Musk’s concerns about bots were genuine and that raising the issue did not constitute fraud.

The lawsuit affects investors who sold Twitter shares at artificially depressed prices between May 13 and October 4, 2022. Musk is also negotiating a separate settlement with the U.S. Securities and Exchange Commission over delayed disclosure of his Twitter purchases, which allegedly allowed him to buy shares at lower prices.

In February, Musk’s SpaceX acquired his AI company xAI, which housed X, creating the world’s most valuable private company, valued at approximately $1.25 trillion.

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