Musk found liable to Twitter shareholders in fraud lawsuit over $44 billion takeover
Technology
A U.S. jury found Elon Musk liable for defrauding Twitter shareholders by making false statements about bots to lower stock value during his $44B 2022 takeover.
SAN FRANCISCO (Reuters) - A U.S. federal jury found Elon Musk liable on Friday for claims he defrauded Twitter shareholders by trying to drive down the social media company's stock price so he could renegotiate or back out of a $44 billion takeover in 2022.
The verdict from a jury in San Francisco federal court came in a closely watched civil trial where Musk, the world's richest person, was accused of falsely claiming on social media that Twitter underreported how many fake and spam accounts, known as bots, were on its platform.
Damages have yet to be calculated but Francis Bottini, a lawyer for the shareholders, estimated they could total about $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."
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.
Musk has often chosen to battle shareholders in court rather than settle.
This included a 2023 trial in San Francisco over whether he defrauded Tesla (TSLA.O) shareholders who claimed to suffer losses after he falsely claimed in 2018 to have "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 ultimately completed his purchase of Twitter in October 2022 and renamed it X.
MUSK LIABLE FOR TWO STATEMENTS
Twitter shareholders challenged three statements Musk made not long after agreeing in April 2022 to buy Twitter, where he questioned whether the company was overrun with bots.
Jurors found Musk liable for two of the statements.
One said the purchase was "temporarily on hold" pending confirmation that bots represented less than 5% of users. The other said the percentage of bots could be "much" higher than 20%, and the takeover could not go forward unless Twitter's chief executive proved the percentage was less than 5%.
