A federal jury in San Francisco has found Elon Musk liable for defrauding Twitter shareholders by attempting to artificially depress the social media platform's share price ahead of his $44 billion takeover in 2022.
The verdict, delivered on Friday, concluded a closely watched civil trial focused on whether the billionaire's public commentary regarding spam and bot accounts was designed to facilitate renegotiating or abandoning the acquisition. Financial damages have yet to be calculated by the court. However, Francis Bottini, a lawyer representing the shareholders, estimated the final penalty could reach approximately $2.5 billion.
Musk Liable In Twitter Lawsuit
The case focused on three distinct statements Musk issued shortly after agreeing to purchase Twitter in April 2022. Jurors ultimately determined he was legally responsible for two of these posts.
In the first actionable statement, Musk declared the acquisition was 'temporarily on hold' pending verification that spam and fake accounts constituted less than 5 per cent of the platform's active users. The second statement suggested the actual bot population could be 'much' higher than 20 per cent, with Musk asserting the takeover could not proceed unless Twitter's chief executive proved the initial 5 per cent metric.
Investors Claim Artificial Share Suppression
This legal action grouped together people who sold their shares between 13 May and 4 October 2022. The plaintiffs told the court that Musk's public commentary actively dragged down the company's valuation during that window, leaving them out of pocket when they offloaded their holdings.
Jurors did hold the billionaire to account for those specific posts. Yet they rejected a broader accusation from the shareholders, concluding there was not enough evidence to prove Musk had orchestrated a wider, deliberate scheme to cheat them.
'Musk's status as the world's richest man is not a free pass,' Bottini said in a statement following the decision. 'If you're able to move markets with your tweets you're responsible for the harm you cause to investors.'
Defence Points To Genuine Concerns
The civil trial commenced on 2 March, with the jury beginning its deliberations on Tuesday. Throughout the proceedings, Musk's defence maintained that his actions were grounded in genuine corporate concerns.
Michael Lifrak, representing Musk in court, countered that the billionaire held real apprehensions regarding the accuracy of Twitter's internal bot metrics. Lifrak argued that speaking openly about the issue did not demonstrate any intent to commit fraud.
Musk's legal team at Quinn Emanuel Urquhart & Sullivan indicated they intend to challenge the decision. In a joint statement, the firm described the jury's ruling as 'a bump in the road', adding that they look forward to 'vindication on appeal'.
Future Battles And SEC Litigation
Musk has historically chosen to battle shareholder disputes in court rather than agreeing to out-of-court settlements. He previously won a 2023 San Francisco trial concerning claims he defrauded Tesla shareholders after stating he had 'funding secured' to take the electric vehicle manufacturer private in 2018. He similarly prevailed in recent Delaware litigation regarding his $139 billion Tesla compensation package.
The Twitter acquisition was eventually completed in October 2022, after which Musk renamed the platform to X.
The Friday verdict arrives alongside separate regulatory proceedings regarding the initial stages of the takeover. Musk is currently in talks to settle a civil lawsuit brought by the US Securities and Exchange Commission. The regulator accuses him of waiting too long in 2022 to disclose his initial purchases of Twitter equity, allowing him to acquire further shares at low prices before the market became aware of his interest.
In a separate corporate development in February, Musk's aerospace firm SpaceX bought his artificial intelligence enterprise xAI, which housed the X platform. The purchase created the world's most valuable private company, holding an estimated valuation of $1.25 trillion at the time.
