A US jury on Friday found Tesla Inc ( TSLA.O ) CEO Elon Musk and his company not responsible for misleading investors when Musk tweeted in 2018 that he had “guaranteed funding” to take the electric car company private.
The plaintiffs have demanded billions in damages and the decision is also considered important for Musk himself, who often takes to Twitter to express his views.
The jury returned with a unanimous verdict about two hours after beginning deliberations.
Musk was not in court when the verdict was read, but tweeted soon after that he was “very appreciative” of the jury’s decision.
“Thank God, the wisdom of the people has won,” he said.
Nicholas Porritt, lawyer for investors, said in a statement, “We are disappointed with the verdict and considering the next step.”
Tesla shares rose 1.6% in after-hours trading following the ruling.
“The dark chapter is now closed for Musk and Tesla,” said Wedbush analyst Dan Ives. Ives added that some Tesla investors fear that Musk will have to sell more Tesla shares if he loses.
The world’s second-richest man previously ran into legal and regulatory trouble 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 previously called the case a strong investor, called the result “amazing.”
U.S. anti-securities fraud laws “have always been considered this great bulwark against misrepresentation and forgery,” he said. “This result makes you wonder if it’s a task in the modern market,” he said, adding that Musk himself would “double down” on his communication tactics after the verdict.
Musk’s attention has been divided in recent months between Tesla, rocket company SpaceX and now Twitter. Tesla investors have expressed concern that the social media company’s run has become too focused.
‘BAD CHOICE OF WORDS’
Tesla shareholders claim Musk misled them when he tweeted on August 7, 2018, that he was considering taking the company private at $420 per share, a premium of about 23% to the previous day’s close, and had “safe funds.”
He said Musk was lying when he tweeted later that “investor support confirmed.”
The stock price rose after the tweets and then fell again after August 17, 2018, as it became clear that the buyout was not going to happen.
Porritt during his closing argument said the billionaire CEO is not above the law, and should be held accountable for his tweets.
“This case is ultimately about whether the rules that apply to everyone else should also apply to Elon Musk,” he said.
Musk’s lawyer Alex Spiro argued that Musk’s “safe fund” tweet was “technically inaccurate” but that investors only care if Musk is considering a purchase.
“The whole case is built on a bad choice of words,” he said. “Who cares about bad word choices?”
“Just because a bad tweet doesn’t make it fraud,” Spiro said in closing arguments.
Economists hired by shareholders have calculated the loss of investors up to $ 12 billion.
During the three-week trial, Musk spent nearly nine hours on the witness stand, telling jurors he believed the tweets were true. He said he had secured the necessary funding, including a verbal commitment from Saudi Arabia’s sovereign wealth fund, the Public Investment Fund. The fund later backed out of its commitment, Musk said.
Musk later testified that he believed he could sell enough shares of the rocket company SpaceX to finance the purchase, and “felt the financing was secured” with only SpaceX stock.
Musk testified that he made the tweets so that small shareholders were the same as big investors who knew about the deal. But he admitted that he had no official commitment from the Saudi fund and other potential backers.
The ruling is another victory for Musk and his lawyer Spiro after winning a defamation lawsuit against the billionaire in 2019 over a tweet that called the cave explorer a “pedo”.
Source: Reuters
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