A federal jury in San Francisco found Elon Musk liable Friday for misleading Twitter investors in the months leading up to his $44 billion acquisition of the social media platform in 2022. The jury found that two tweets posted by Musk in May 2022 contained false statements responsible for a plunge in Twitter’s share price. However, they absolved Musk of claims that he engaged in a deliberate “scheme” to defraud investors. The verdict was reached after nearly four days of deliberation following a nearly three-week trial.
What the Jury Decided
The jury found Musk liable because of two specific tweets. The first, posted on May 13, 2022, claimed the Twitter deal was “temporarily on hold” while he sought information about the prevalence of bots on the platform. The second, posted on May 17, stated the deal could not move forward until Twitter provided evidence that fewer than 5% of its accounts were fake. The jury found Musk violated a securities rule that bars false and misleading statements that sink a stock price. It rejected two of the four fraud claims brought against him, including the allegation that he orchestrated a scheme to defraud investors. Musk’s legal team vowed an appeal, calling the verdict “a bump in the road.”
What Musk Said at Trial
Musk testified at length during the nearly three-week trial, maintaining that Twitter’s leadership had lied about the number of bots on the platform and withheld information about how fake accounts were calculated. He repeatedly described Twitter’s disclosures using a crude scatological abbreviation and said “I did make it clear that I thought it was BS.” He also argued that completing the deal at the original price of $54.20 per share provided a windfall for most shareholders.
The Damages Question
Plaintiffs’ attorney Mark Molumphy said after the verdict he believes damages will total approximately $2.6 billion. The actual amount each shareholder will receive will be determined later when individual shareholders submit claims. Even an award that size would represent a fraction of Musk’s net worth, which stood at approximately $661 billion on Friday according to Bloomberg. Jurors calculated per-share damages for each trading day over approximately a five-month period during which shareholders sold at what they described as artificially deflated prices.
The Broader Significance
“This verdict sends a clear message: if you move the market with your words, you own the consequences,” said trial lawyer Monte Mann of Armstrong Teasdale. “Going forward, this will have a real chilling effect. Executives and dealmakers will need to think carefully about how public statements can be interpreted — not just as disclosure but as part of the negotiation itself.”
Plaintiff’s attorney Joseph Cotchett said: “It’s an important victory, not just for investors of Twitter, but for the public markets. I think the jury’s verdict sends a strong message that just because you’re a rich and powerful person, you still have to obey the law, and no man is above the law.”
The verdict marks a rare defeat in court for Musk, who has been nicknamed “Teflon Elon” for his track record of winning high-stakes legal battles. He prevailed in a 2023 trial over Tesla investor allegations that he misled them with a 2018 tweet claiming he had “funding secured” to take Tesla private.
Why This Matters to You
This verdict has implications that extend well beyond Elon Musk and Twitter. Public statements by executives, including social media posts, can move markets. This case establishes that those who move markets with deliberately false statements face civil liability, even if the broader scheme allegation does not hold. For ordinary investors, including those with 401ks, pension funds and retirement accounts, that accountability matters.
As plaintiff attorney Joseph Cotchett said in the courthouse: “This is a great example of what you cannot do to the average investor — people that have 401ks, kids, pension funds, teachers, firemen, nurses.” It is worth thinking about: Should there be clearer regulatory guidance about when a CEO’s social media posts constitute material market disclosures? If Musk successfully appeals, what precedent does a reversal set for executive accountability over market-moving statements? And with damages potentially reaching $2.6 billion but representing less than 0.5% of Musk’s net worth, does the verdict actually create a meaningful deterrent for the world’s wealthiest individual?
-Elijah Iraheta, Editor in Chief, ASC News
