A US federal jury found Elon Musk liable on Friday for allegations that he defrauded Twitter shareholders by trying to depress the company’s stock price so he could renegotiate or pull out of a $44 billion takeover in 2022.
The verdict by a jury in San Francisco federal court 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 underreported how many fake and spammy accounts, known as bots, were on its platform.
Damages have not yet been calculated, but Francis Bottini, a lawyer for the shareholders, estimated they could be around $2.5 billion.
“Musk’s status as the world’s richest man 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 harm you cause investors.”
In a joint statement, Musk’s lawyers at Quinn Emanuel Urquhart & Sullivan called the ruling “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 settle.
This included a 2023 lawsuit in San Francisco over whether he defrauded Tesla shareholders who claimed losses after he falsely claimed in 2018 to have “secured financing” to take the electric car company private, and lawsuits 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 is responsible for two statements
Twitter shareholders took issue with three statements Musk made not long after he agreed in April 2022 to buy Twitter, questioning whether the company was overrun with bots.
Jurors found Musk responsible 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 proceed unless Twitter’s CEO proved the percentage was less than 5%.
Jurors also said the shareholders failed to prove a separate allegation that Musk engaged in a scheme to defraud them.
Michael Lifrak, a lawyer for Musk, countered that the billionaire’s concern about bots was real and that speaking out about the issue did not show Musk committed or intended to commit fraud.
The lawsuit covers investors who claimed to sell Twitter stock at prices that Musk artificially lowered between May 13 and October 4, 2022.
Separately, Musk is in talks to settle a civil lawsuit from the US Securities and Exchange Commission that accuses him of waiting too long until 2022 to disclose his first purchases of Twitter 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 world’s most valuable private company, worth about $1.25 trillion at the time.
