Jury Deliberates Whether Elon Musk Defrauded Twitter Shareholders in $44 Billion Takeover

A federal jury in San Francisco began deliberating on Tuesday whether Elon Musk committed securities fraud by making public statements designed to drive down Twitter's stock price during his contested $44 billion acquisition of the social media platform in 2022 Musk’s motives are debated as Twitter shareholder trial nears endi-invdn-com.investing.com·Secondary. The eight jurors were dismissed without reaching a verdict and were expected to resume deliberations on Wednesday, a court officer confirmed Musk’s motives are debated as Twitter shareholder trial nears endi-invdn-com.investing.com·Secondary.

The case, which went to trial on March 2, represents one of the most significant shareholder lawsuits to reach a jury in recent memory. It covers investors who sold Twitter stock between May 13 and October 4, 2022 — a turbulent period during which Musk publicly wavered on his commitment to the purchase Musk’s motives are debated as Twitter shareholder trial nears endi-invdn-com.investing.com·Secondary. Plaintiffs argue that Musk's statements about bots and fake accounts on Twitter were calculated to depress the share price so he could renegotiate or exit the deal entirely.

Closing arguments lay out competing narratives

In his closing argument on Tuesday, plaintiffs' attorney Mark Molumphy urged jurors to hold Musk accountable for what he described as a deliberate campaign to undermine Twitter's value. Molumphy told the court that Musk had publicly questioned on three separate occasions whether Twitter was overrun with fake and spam accounts, suggesting the platform had four or five times more than the 5 per cent it disclosed in regulatory filings Musk’s motives are debated as Twitter shareholder trial nears endi-invdn-com.investing.com·Secondary.

Molumphy argued that Musk was not bothered by the bot issue when he signed the April 2022 merger agreement, and that his subsequent public complaints were a pretext. According to the plaintiffs' case, Musk's actions followed a clear pattern: trash the company, trash the executives, and tank the stock Musk’s motives are debated as Twitter shareholder trial nears endi-invdn-com.investing.com·Secondary.

Musk's defense attorney Michael Lifrak offered a starkly different account. In his closing statement, Lifrak told jurors that Musk had a genuine concern about the prevalence of bots on the platform and was focused on understanding the scope of the problem rather than engineering a cheaper deal Musk’s motives are debated as Twitter shareholder trial nears endi-invdn-com.investing.com·Secondary.

Lifrak pushed back forcefully against the fraud allegation, telling the jury that the plaintiffs had failed to prove their case. He argued that demonstrating a stock price decline after a public statement does not, on its own, constitute evidence of securities fraud Musk’s motives are debated as Twitter shareholder trial nears endi-invdn-com.investing.com·Secondary. The defense maintained that Musk's statements reflected legitimate business concerns, not a scheme to manipulate the market.

The bot controversy at the center of the trial

The dispute over Twitter's bot numbers has been central to the proceedings. Musk began questioning his Twitter purchase shortly after agreeing to it, posting on the social media platform that the transaction was temporarily on hold and suggesting that the percentage of bots could be 20 per cent or more Musk’s motives are debated as Twitter shareholder trial nears endi-invdn-com.investing.com·Secondary.

In one of the three statements under scrutiny, Musk tweeted on May 17, 2022, that the purchase could not go forward until Twitter's chief executive proved the bot percentage was less than 5 per cent Musk’s motives are debated as Twitter shareholder trial nears endi-invdn-com.investing.com·Secondary. This and two other public communications form the basis of the plaintiffs' securities fraud claim.

Twitter subsequently sued to force Musk to complete the takeover at the originally agreed price. Just before that Delaware case was scheduled for trial, Musk reversed course and completed the acquisition in October 2022 Musk’s motives are debated as Twitter shareholder trial nears endi-invdn-com.investing.com·Secondary. He later rebranded the platform as X.

The question of whether Musk's public skepticism about bots was sincere or strategic is what the jury must now resolve. If jurors find that none of the three challenged statements were fraudulent, Musk prevails. If they determine fraud occurred, the case proceeds to a damages phase Musk’s motives are debated as Twitter shareholder trial nears endi-invdn-com.investing.com·Secondary.

A familiar courtroom for Musk

The Twitter shareholder case is the latest in a series of high-profile legal battles for the world's wealthiest individual. Musk has on multiple occasions chosen to fight shareholders in court rather than settle, including in a 2023 trial concerning Tesla and separate litigation over his $139 billion Tesla compensation package Musk’s motives are debated as Twitter shareholder trial nears endi-invdn-com.investing.com·Secondary. He won both of those cases.

Musk is also in talks to settle a separate U.S. Securities and Exchange Commission civil lawsuit that accuses him of violating federal law by waiting too long in 2022 to disclose his initial purchases of Twitter stock, allowing him to acquire more shares before other investors caught on Musk’s motives are debated as Twitter shareholder trial nears endi-invdn-com.investing.com·Secondary.

Earlier this month, Musk filed a motion for a mistrial in the current case, alleging that he had been deprived of his right to a fair trial due to the conduct of the plaintiffs and, in some instances, the presiding judge. The judge overseeing the case has acknowledged that many prospective jurors expressed negative views about Musk during jury selection but emphasized that even a person who is not universally liked deserves a fair proceeding.

Musk's empire in context

The financial stakes of the trial, while potentially significant for the plaintiff class, represent a fraction of Musk's vast business empire. Forbes magazine estimates his net worth at $836.4 billion, making Twitter — now X — a comparatively small part of his holdings Musk’s motives are debated as Twitter shareholder trial nears endi-invdn-com.investing.com·Secondary.

X is currently housed within SpaceX after the rocket and satellite company purchased Musk's artificial intelligence venture xAI last month. That transaction created the world's most valuable private company, valued at approximately $1.25 trillion at the time Musk’s motives are debated as Twitter shareholder trial nears endi-invdn-com.investing.com·Secondary. The combined entity could pursue an initial public offering as early as June, according to reports.

Musk's involvement in government cost-cutting through the Department of Government Efficiency has added another dimension to his public profile, making the trial's outcome a subject of interest well beyond Wall Street. His supporters view the shareholder lawsuit as yet another attempt by the legal system to punish an unconventional businessman, while critics argue that even the world's richest person must be held to the same securities laws as everyone else.

What comes next

The jury's deliberations are expected to continue through the week. The eight jurors must decide two core questions: whether Musk's three statements about bots constituted fraud, and whether he schemed to defraud Twitter shareholders by driving down the share price Musk’s motives are debated as Twitter shareholder trial nears endi-invdn-com.investing.com·Secondary.

A verdict in Musk's favor would extend his unbroken record of courtroom victories in shareholder disputes and could embolden him in his pending SEC negotiations. A finding of liability, on the other hand, would open the door to a damages phase that could result in billions of dollars in compensation for the investor class — a sum that, while substantial, would represent a small fraction of Musk's overall wealth.

Regardless of the outcome, the trial has offered a rare public examination of the chaotic months leading up to one of the most consequential corporate acquisitions in Silicon Valley history. The jury's answer will determine whether Musk's public musings about bots were the honest observations of a concerned buyer or a calculated strategy to renegotiate the terms of a deal he no longer wanted.