Jury holds Elon Musk liable in Twitter fraud case over takeover battle

A federal jury in San Francisco has found Elon Musk liable in a civil case brought by former Twitter shareholders, concluding that two of his 2022 public statements about bots and spam accounts misled investors during his $44 billion takeover battle for the company. The verdict marks a major legal setback for Musk, even though jurors stopped short of finding that he carried out a broader scheme to defraud shareholders.

The case centered on whether Musk’s public comments during the takeover saga were meant to push Twitter’s stock lower so he could renegotiate the deal or walk away from it. Shareholders argued that his statements rattled the market and hurt investors who sold their shares while the acquisition was in limbo. According to Reuters, the lawsuit covers investors who said they sold Twitter stock at artificially depressed prices between May 13 and Oct. 4, 2022.

Two statements proved costly

Jurors found Musk liable over two statements made after he agreed to buy Twitter in April 2022. One was his claim that the acquisition was “temporarily on hold” while he verified that fake and spam accounts made up less than 5 per cent of users. The second was his claim that the bot share could be far higher, possibly above 20 per cent, and that the deal could not move forward unless Twitter’s leadership proved otherwise.

However, the jury did not accept every part of the shareholders’ case. It rejected a separate allegation that Musk had engaged in a wider fraudulent scheme. That split verdict means the court found specific misleading conduct, but not the full pattern of deception that plaintiffs had also tried to prove.

Lawyers representing the shareholders said potential damages could reach roughly $2.5 billion, while AP reported the figure at about $2.6 billion. The final amount, however, has not yet been determined by the court.

Appeal ahead as legal pressure grows

Musk’s legal team said the verdict was only “a bump in the road” and made clear that they plan to appeal. The trial began on March 2, with jurors starting deliberations earlier this week before returning the verdict on Friday.

The ruling adds to a growing list of high-profile legal fights surrounding Musk’s public statements and corporate conduct. Reuters noted that he previously fought — and won — cases tied to his 2018 “funding secured” tweet about taking Tesla private and litigation over his Tesla pay package. He is also separately in settlement talks with the US Securities and Exchange Commission over allegations that he delayed disclosing his initial purchases of Twitter stock in 2022.

Musk ultimately completed the Twitter acquisition in October 2022 and later rebranded the platform as X. But this verdict makes clear that, even after the takeover closed, the legal and financial consequences of that chaotic deal are still far from over.