Elon Musk cleared in trial over tweets about taking Tesla private

A jury has cleared Elon Musk of wrongdoing for 2018 tweets in which he declared he had financing to take Tesla private.

Jury deliberated whether tweet artificially inflated automaker's share price

A man in a dark suit walks out of an office building.

A U.S. jury has cleared Elon Musk of wrongdoing for 2018 tweets in which he declared he had financing to take Tesla private.

The nine jurors found the Tesla Inc. CEO his company were not liable for misleading investors when he tweeted in 2018 that he had lined up funding to take the electric car company private.

Plaintiffs had claimed billions in damages and the decision also had been seen as important for Musk himself, who has aggressively defended his ability to tweet broadly.

The jury came back with a verdict roughly two hours after beginning deliberations.

"The jury got it right," Musk's lawyer, Alex Spiro, told reporters after the verdict. He declined to say more.

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 US in October.

A sketch of a man facing left, sitting between two other men.

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.

Investors sought billions in damages from Musk, Tesla and several of the company's directors.

Earlier Friday, Musk sat stoically in court, while he was both vilified as a rich narcissist whose reckless behaviour risks "anarchy" and hailed as a visionary looking out for the "little guy" in closing the trial's arguments.

Musk's decision to show up for the closing arguments — even though his presence wasn't required — underscored the importance of the trial's outcome to him.

Share price dropped

Tesla shareholders claim Musk misled them when he tweeted on Aug. 7, 2018, that he was considering taking the company private at $420 US per share, a premium of about 23 per cent to the prior day's close, and had "funding secured."

They say Musk lied when he tweeted later that day that "investor support is confirmed."

WATCH | Turmoil at Twitter:

What's going on with Twitter? | About That

2 months ago

Duration 20:59

Elon Musk's Twitter acquisition has led to some big changes — is the social media platform doing better than ever or dying a spectacular death? Tech reporter Josh O'Kane joins Andrew Chang to play a game of Jenga and help explain what's going on.

The stock price soared after the tweets and then fell again after Aug. 17, 2018, as it became clear the buyout would not happen.

Nicholas Porritt, a lawyer for the Tesla shareholders, urged the jurors to rebuke Musk for his "loose relationship with the truth."

"Our society is based on rules," Porritt said. "We need rules to save us from anarchy. Rules should apply to Elon Musk like everyone else."

An economist hired by the shareholders calculated investor losses as high as $12 billion.

Musk defended tweets

During the three-week trial, 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 backpedaled on its commitment, Musk said.

Musk later testified that he believed he could have sold enough shares of his rocket company SpaceX to fund a buyout, and "felt funding was secured" with SpaceX stock alone.

Musk testified that he made the tweets in order to put small shareholders on the same footing as large investors who knew about the deal. But he acknowledged he lacked formal commitments from the Saudi fund and other potential backers.

He said his tweets in general did not always affect Tesla stock the way he expects.

Musk's lawyer, Spiro, said that Musk's "funding secured" tweet was "technically inaccurate" but that investors only cared that 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," Spiro said during closing arguments.

LISTEN | Where things went south for Tesla's stock in 2022:

Front Burner25:36Tesla’s stock is tanking. Here’s why

Not long ago, Tesla seemed unstoppable. But Elon Musk's electric vehicle juggernaut closed out 2022 as the worst-performing stock among the most valuable tech companies — and its shares have dipped even lower since then. Today, Patrick George — a contributing writer with Vox Media's The Verge and an editor with The Autopian — joins us for a look at where things went south for Tesla, and the hurdles the company faces going forward.

Credit belongs to : www.cbc.ca

Check Also

U.S. Fed holds benchmark interest rate steady — but hints another one is coming

The U.S. Federal Reserve held interest rates steady on Wednesday but suggested it expects one …