
In a significant legal development, a jury in San Francisco has concluded that Elon Musk is liable for defrauding investors by intentionally lowering Twitter’s stock value in the lead-up to his high-profile acquisition of the company in 2022. However, the jury cleared him of certain fraud charges, determining that he did not engage in a deliberate scheme to mislead investors.
The case revolved around a class-action lawsuit initiated shortly before Musk’s takeover of Twitter, which he has since rebranded as X. At the heart of the trial was the question of whether two tweets and Musk’s statements on a podcast in May 2022 constituted deliberate deceit aimed at Twitter shareholders, who sold their shares based on his communications.
The verdict was reached by the nine-member jury after nearly four days of deliberation, following almost three weeks of testimony and evidence presented since the trial commenced on March 2. The jury found Musk responsible for misleading investors with two specific tweets, one of which claimed the Twitter deal was “temporarily on hold.” However, they determined that a podcast statement did not contribute to any intentional scheme to defraud.
As a result, the jury awarded damages to shareholders ranging from approximately $3 to $8 per stock per day, totaling around $2.1 billion in stock and an additional $500 million in options, according to lawyers representing the plaintiffs. Musk’s wealth, primarily linked to his stake in Tesla, is currently valued at approximately $814 billion.
Joseph Cotchett, representing the plaintiffs, remarked on the broader implications of the verdict: “It’s an important victory, not just for investors of Twitter, but for the public markets. The jury’s decision underscores that wealth and influence do not exempt individuals from legal accountability. No person is above the law.”
Musk’s legal team referenced other cases Musk won and said they will appeal.
“Last month, Elon won the largest appellate victory in this country’s history after getting an unfair shake at the trial level. Earlier today, in a Texas court he won another appellate victory in which the trial judge was reversed,” the legal team at Quinn Emanuel Urquhart & Sullivan said in a statement. “We view today’s verdict, where the jury found both for and against the plaintiffs and found no fraud scheme, as a bump in the road. And we look forward to vindication on appeal.”
Much of the trial focused on Musk’s claims about the number of bots on Twitter. Musk testified that Twitter had a much higher number of fake and spam accounts than the 5% it disclosed in regulatory filings. He used what he called Twitter’s misrepresentation of the number of fake accounts on its service as a reason to retreat from the purchase.
After Musk tried to back out, Twitter went to court in Delaware to force him to honor his original deal. Just before that case was scheduled to go to trial, Musk reversed course again and agreed to pay what he had originally promised.
The central question of the case was whether Musk sent out tweets — including one on May 13, 2022, that said the Twitter deal was “temporarily on hold” while he sought information on the number of fake accounts on the service — as a deliberate scheme to tank Twitter’s shares. The jury found that while Musk did mislead investors with two tweets, he did not do so with a statement he made on a podcast because it was an opinion. The jurors also absolved him of scheming to drive down the stock.
The nearly three-week trial in San Francisco federal court for the Northern District of California saw testimony from former Twitter executives including CEO Parag Agrawal and CFO Ned Segal, as well as Musk, who was on the stand for more than a day.
In his testimony, Musk maintained that Twitter’s leadership lied about the amount of bots on the platform and withheld information from him about how the number of fake accounts was calculated. He repeatedly described the information that Twitter’s board provided with an abbreviation for a bull’s scatology. “I did make it clear that I thought it was BS,” Musk said of Twitter’s calculations asserting that only about 5% of its accounts were bots.
Musk also asserted that his decision to follow through on the deal at the original sales price provided a huge windfall for most Twitter shareholders.
But Twitter’s shares fell below $33, or about 40% below Musk’s original purchase price, while the deal was hanging in limbo. That downturn cost shareholders who sold their stock during the uncertainty caused by what the lawsuit alleges was Musk’s deceitful behavior.
“I can’t control whether people sell their stock, but everyone who held the stock fared extremely well,” Musk said.
The plaintiffs argued that, as Tesla’s stock price declined and buying Twitter became too expensive for Musk, he tweeted statements that drove down the stock price in the hopes he could renegotiate the deal for a lower price or get out of it altogether.
Musk’s tweets, the plaintiffs’ lawyer argued, were not some “innocent mistake” or a “stupid tweet” off the top of his head, but carefully calculated to drive down’s Twitter’s stock price.
In closing arguments, Mark Molumphy, a lawyer for the plaintiffs, asked jurors to hold Musk accountable and compensate thousands of investors who lost money because of tweets Musk sent, including one from May 13, 2022, that said the deal was “on hold.”
“He knew what he was doing,” Molumphy said.
Musk’s lawyers motioned for a mistrial several times during the contentious trial, contending that the billionaire Tesla CEO can’t get a fair trial in San Francisco because of animosity toward him from the public.
This isn’t the first time that Musk has been dragged into court to defend himself against allegations of duping investors with his social media posts. Three years ago, Musk spent about eight hours testifying in a San Francisco federal trial about his plans to buy Tesla — the electric automaker that he still runs as a publicly traded company — for $420 per share in a proposed 2018 deal that never materialized. A nine-member jury absolved Musk of wrongdoing in that case.
Monte Mann, a business litigation lawyer who was not a part of the case, said the “verdict sends a clear message—if you move the market with your words, you own the consequences.”
“The law has always prohibited misleading statements. What’s new is the scale and speed,” Mann said. “When one person can move billions with a tweet, the consequences of those statements are amplified — and juries are starting to take that seriously.”







