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Tesla's Elon Musk found not liable in trial over 2018 'funding secured' tweets

Published 02/03/2023, 06:07 AM
Updated 02/04/2023, 08:51 AM
© Reuters. FILE PHOTO: Tesla CEO Elon Musk and his security detail depart the company’s local office in Washington, U.S. January 27, 2023.  REUTERS/Jonathan Ernst/File Photo

By Jody Godoy and Hyunjoo Jin

SAN FRANCISCO (Reuters) -A U.S. jury on Friday found Tesla (NASDAQ:TSLA) Inc CEO Elon Musk and his company were not liable for misleading investors when Musk tweeted in 2018 that he had "funding secured" to take the electric car company private.

Plaintiffs had claimed billions in damages and the decision also had been seen as important for Musk himself, who often takes to Twitter to air his views.

The jury came back with a unanimous verdict roughly two hours after beginning deliberations.

Musk was not present in court when the verdict was read but soon tweeted that he was "deeply appreciative" of the jury's decision.

"Thank goodness, the wisdom of the people has prevailed," he said.

Nicholas Porritt, a lawyer for the investors, said in a statement, "We are disappointed with the verdict and are considering next steps."

Shares of Tesla rose 1.6% in after-hours trading following the verdict.

"A dark chapter is now closed for Musk and Tesla," Wedbush analyst Dan Ives said. Ives added that some Tesla investors feared Musk might have to sell more Tesla stock if he lost.

The world's second-richest person has previously created legal and regulatory headaches through his sometimes impulsive use of Twitter, the social media company he bought for $44 billion in October.

Minor Myers, who teaches corporate law at the University of Connecticut and who had previously called the investors' case strong, called the outcome "astounding."

The U.S. anti-securities fraud law "has always been thought to be this great bulwark against misstatements and falsehoods," he said. "This outcome makes you wonder if it is up to the job in modern markets," he said, adding that Musk himself was likely to "double down" on his communication tactics after the verdict.

Musk's attention has been divided in recent months between Tesla, his rocket company SpaceX and now Twitter. Tesla investors have expressed concerns that running the social media company has taken up too much of his focus.


Tesla shareholders claimed Musk misled them when he tweeted on Aug. 7, 2018, that he was considering taking the company private at $420 per share, a premium of about 23% to the prior day's close, and had "funding secured."

They say Musk lied when he tweeted later that day that "investor support is confirmed."

The stock price soared after the tweets and then fell again after Aug. 17, 2018, as it became clear the buyout would not happen.

Porritt during closing arguments said the billionaire CEO is not above the law, and should be held liable for the tweets.

"This case ultimately is about whether rules that apply to everyone else should also apply to Elon Musk," he said.

Musk's lawyer Alex Spiro countered that Musk's "funding secured" tweet was "technically inaccurate" but that investors only cared that Musk was considering a buyout.

"The whole case is built on bad word choice," he said. "Who cares about bad word choice?"

"Just because it's a bad tweet doesn't make it fraud," Spiro said during closing arguments.

An economist hired by the shareholders had calculated investor losses as high as $12 billion.

During the three-week trial, Musk spent nearly nine hours on the witness stand, telling jurors he believed the tweets were truthful. He said he had lined up the necessary financing, including a verbal commitment from Saudi Arabia's sovereign wealth fund, the Public Investment Fund. The fund later backpedaled on its commitment, Musk said.

Musk later testified that he believed he could have sold enough shares of his rocket company SpaceX to fund a buyout, and "felt funding was secured" with SpaceX stock alone.

© Reuters. FILE PHOTO: Tesla CEO Elon Musk and his security detail depart the company’s local office in Washington, U.S. January 27, 2023.  REUTERS/Jonathan Ernst/File Photo

Musk testified that he made the tweets in order to put small shareholders on the same footing as large investors who knew about the deal. But he acknowledged he lacked formal commitments from the Saudi fund and other potential backers.

The verdict is another victory for Musk and his lawyer Spiro after they won a defamation lawsuit against the billionaire in 2019 over his tweet calling a cave explorer a "pedo guy".

Latest comments

the precedent is set, now any ceo can freely manipulate the market with any unfounded claim of their choosing
Benjamin USA LOL! First it's singular; 'Coal' roller. And, they were just RED Blooded Americans. It would be very unwise to use snowflake in the same sentence referencing a 'Coal Roller' when talking to one. You can't shift the 'Snowflake' personification from the left to the right. The left created the pathetic iconic imagery of 'Snowflake', the Coal Rollers just blanked it out for a few seconds, entirely different! Looking at all the post, it's all so funny. The case had nothing to do with left, right, red, blue. The case was squarely about being gullible, and neuronically challenged. Day, swing traders saw the post and moved in for the kill, got their heads handed to them, and cried foul. Conservatives derssed in sheeps clothing, and die hard liberals all coalesced [funny, COAL again :0] to get their money back. Thankfully 9 level headed, conservatives, liberals, republicans, democrats, voted 9-0 against the Liberal weaponized Justice System.
It was not a smart case to begin with. He’s done much worse stuff more recently but now the SEC had egg on their face and will be scared. What fools.
What does the SEC have to do with a case brought by private investors against Musk? Pay attention and get your facts straight.
He deserves punishment for this.... Its not like this was the first time he manipulated markets and did fraudulent things (Solar city). Amazing how easy it is to avoid punishment when a billionaire,
Enron Musk will be remembered as the thomas edison of the 21st century. Just another fraud oligarch who stole work from true scientists
hahaha… spent so much time studying all the cases of “eNrOn mUsK” failures, have you? Great use of your time. Shows how successful you, yourself are. LOL
Time? Anybody paying the least amount of attention is aware of Dogecoin Musk's reputation.
someone pissy 🤡 😂
if Elon musk was a leftist there would not have been a suit in the first place.
Another triggered rw terror simp on here to cry about leftists like the beta cuck he really is.
Now funding is secure for it to first break 200. And it Wil be soon.
Who brought the suit, a group of 'Front Running Hedge Funds'? What a joke! Front running insider information by these criminals never lands any in prison, but have them get taken at their own game and they all go crying like sissy school girls to their lawyers. Suck it up, write off the loss and move on. So sick of the liberal justice system!
Spoken by a true liberal.
no news here. just another left wing witch hunt.
Braindead is thinking the left cares about this case. Wasnt it RW terrorism loving snowflakes keying Teslas and rolling coals in front of EVs on the highway causing accidents and injury?
No fines. Just prison time
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