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Elon Musk Liable for Misleading Twitter Investors; Faces Potential $2.6 Billion Damages
A California jury found Elon Musk liable for misleading Twitter investors in 2022, prior to his acquisition of the company. The lawsuit was related to statements about the deal being on hold and the number of spam accounts.
A San Francisco jury determined that Elon Musk defrauded Twitter shareholders by making misleading statements that drove down the company's stock price. The class-action lawsuit was filed on behalf of investors who sold shares between May and October 2022. The suit centred around public remarks made by Musk regarding spam and fake accounts on the platform. Jurors found him liable for a May 2022 tweet stating the buyout was "temporarily on hold", which contributed to a decline in Twitter's market value. While the jury held Musk accountable for the misleading statements, they absolved him of claims that he engaged in a broader scheme to defraud investors. Mark Molumphy, an attorney for the plaintiffs, called the verdict an important victory for public markets.
Key Facts
- Elon Musk was found liable for misleading investors during his $44 billion purchase of Twitter.
- The lawsuit focused on tweets and comments made in May 2022.
- A tweet stating the Twitter deal was "temporarily on hold" preceded a share plunge of almost 10%.
- The jury stated that Musk misled shareholders who sold Twitter shares at a lower price.
- Jurors cleared Musk of intentionally scheming to mislead investors.
- Musk's lawyers will appeal the ruling.
- Damages could total up to $2.6 billion, according to the shareholders' lawyers.
- The lawsuit was filed before Musk took control of the platform and rebranded it as X.