For his part, Tesla founder Elon Musk has been exonerated of any wrongdoing related to his tweet in which he claimed to have “funding secured” to return the electric carmaker to private ownership. Investors claimed he cost them billions of dollars because he misled them in August of this year.
The £60 billion ($72 billion) buyout that was planned fell through. Musk could have been held responsible for billions in damages. The nine-person jury deliberated for less than two hours on Friday afternoon before reaching a verdict in the class-action lawsuit.
Mr. Musk, who claimed he could not get a fair trial in San Francisco, was pleased with the verdict. Tesla is headquartered in Texas. He then took to Twitter, the microblogging service he had just purchased for $44 billion the previous October, and wrote, “Thank goodness, the wisdom of the people has prevailed!”
I am incredibly grateful that the jury in the Tesla 420 take-private case reached a unanimous verdict of not guilty. Mr. Musk’s tweet from August 7, 2018, which read: “Am considering taking Tesla private at $420. Secured funding.”
When Mr. Musk tweeted later that day that “investor support is confirmed,” the plaintiffs claimed he had lied. After a brief increase in response to the tweets, the stock price promptly declined once it became apparent that the deal would not go through.
After many shareholders made decisions about buying and selling shares based on the tweet, investor losses were calculated to be as high as $12bn, according to an economist hired by the shareholders.
Using Mr. Musk’s tweets as evidence, the US Securities and Exchange Commission (SEC) filed a lawsuit against him, accusing him of making false statements to investors. Mr. Musk settled for $20 million and a resignation as chairman of Tesla’s board.
Mr. Musk, who is also the CEO of SpaceX and Twitter, claimed during the three-week trial that he had a verbal commitment from Saudi Arabia’s sovereign fund for the deal. Just because I tweet something does not mean people believe it or will act accordingly,” the world’s second-richest man testified for nearly nine hours. Investors maintained that the phrase “funding secured” implied more than just an informal understanding.
Only a “bad tweet,” then?
While Mr. Musk acknowledged that Tesla’s stock price increased after his tweet, he also cast doubt on whether or not his tweets actually affected the stock price.
He claims the effect of his tweets on the stock price is unpredictable because “at one point I tweeted that I thought that, in my opinion, the stock price was too high… and it went higher, which is counterintuitive.”
Mr. Musk stated he abandoned the idea of taking Tesla private after hearing from smaller investors that they would prefer the company to remain publicly traded. He missed the verdict being read, but he was there for closing arguments on Friday, where his attorneys painted competing portraits of him.
Legal counsel for Tesla investors Nicholas Porritt made the following statement: “Our society is based on rules. Anarchy is avoided with the help of rules. Elon Musk should be subject to the same rules as everyone else. Musk’s lawyer, Alex Spiro, has stated, “Just because it’s a bad tweet doesn’t make it a fraud. “Mr. Porritt stated after the verdict, “We are disappointed with the verdict and are considering next steps.”
Although he occasionally showed signs of irritation at the line of questioning, Mr. Musk testified with a cool demeanour. The mood occasionally lightened. Immediately after a lawyer for a group of shareholders referred to Elon Musk as “Mr Tweet,” Musk adopted that handle for himself on Twitter.
Director James Murdoch, son of Rupert Murdoch, was one of several who testified. They testified that the Tesla board was not necessary for Mr. Musk’s buyout tweets.
Reed Kathrein, a lawyer specialising in securities fraud, said the not guilty verdict was “a travesty to investors and the securities laws” and called Musk’s tweet about taking Tesla private “as concrete a statement of taking a company private as there can be.”