Key Points
- Mr Musk tweeted in 2018 that he had “funding secured” to take the electric car company private.
- Shares of Tesla rose 1.6 per cent in after-hours trading following the verdict.
- Tesla shareholders say Mr Musk lied when he tweeted later that day that “investor support is confirmed.”
A US jury has found Tesla Inc CEO Elon Musk and his company were not liable for misleading investors when Mr Musk tweeted in 2018 that he had “funding secured” to take the electric car company private.
Plaintiffs had claimed billions in damages and the decision had been seen as important for Mr Musk himself, who often takes to Twitter to air his views.
The jury came back with a unanimous verdict roughly two hours after beginning deliberations.
Mr Musk was not present in court when the verdict was read but soon tweeted that he was “deeply appreciative” of the jury’s decision. “Thank goodness, the wisdom of the people has prevailed,” he said.
Nicholas Porritt, a lawyer for the investors, said in a statement, “We are disappointed with the verdict and are considering next steps.”
Shares of Tesla rose 1.6 per cent in after-hours trading following the verdict.
The world’s second-richest person has previously created legal and regulatory headaches through his sometimes impulsive use of Twitter, the social media company he bought for $44 billion in October.
Mr Musk’s attention has been divided in recent months between Tesla, his rocket company SpaceX and now Twitter. Tesla investors have expressed concerns that running the social media company has taken up too much of his focus.
Tesla shareholders claimed Mr Musk misled them when he tweeted on August 7, 2018, that he was considering taking the company private at $420 per share, a premium of about 23 per cent to the prior day’s close, and had “funding secured.”
They say Mr Musk lied when he tweeted later that day that “investor support is confirmed.”
The stock price soared after the tweets and then fell again after August 17, 2018, as it became clear the buyout would not happen.
Mr Porritt during closing arguments said the billionaire CEO is not above the law, and should be held be liable for the tweets.
“This case ultimately is about whether rules that apply to everyone else should also apply to Elon Musk,” he said.
Mr Musk’s lawyer Alex Spiro countered that Mr Musk’s “funding secured” tweet was “technically inaccurate” but that investors only cared that Mr Musk was considering a buyout.
“The whole case is built on bad word choice,” he said. “Who cares about bad word choice?”
“Just because it’s a bad tweet doesn’t make it fraud,” Mr Spiro said during closing arguments.
An economist hired by the shareholders had calculated investor losses as high as $12 billion.
During the three-week trial, Mr Musk spent nearly nine hours on the witness stand, telling jurors he believed the tweets were truthful.
He said he had lined up the necessary financing, including a verbal commitment from Saudi Arabia’s sovereign wealth fund, the Public Investment Fund. The fund later backpedalled on its commitment, Mr Musk said.
He said his tweets in general did not always affect Tesla stock the way he expects.
“Just because I tweet something does not mean people believe it or will act accordingly,” Mr Musk told the jury.
Discussion about this post