Elon Musk, the founder of Tesla, has been exonerated of all charges related to a tweet in which he claimed to have “financing secured” to take the electric vehicle manufacturer private.
In August 2018, Tesla shareholders accused Mr. Musk of deceiving them through his social media posts and filed a class-action lawsuit on their behalf.
The planned $72 billion (£60 billion) takeover never happened.
In the event that Mr. Musk had been found at fault by the San Francisco jury, he might have been forced to pay billions of dollars in damages.
On Friday afternoon, it took the nine jurors less than two hours to reach a verdict.
Mr. Musk, who had said he couldn’t obtain a fair trial in San Francisco and wanted the trial transferred to Texas, where Tesla is based, applauded the verdict.
He commented on Twitter, the social media site he paid $44 billion for in October: “Thank goodness, the people’s wisdom has won!
“I am really grateful for the jury’s unanimous decision to declare the defendants innocent in the Tesla 420 take-private case.”
Mr. Musk’s tweet from August 7, 2018, “Am considering taking Tesla private at $420,” was at the center of the case. Funds are in place.
When Mr. Musk tweeted later in the day that “investor support is confirmed,” the plaintiffs claimed he had lied.
Following the tweets, the stock price rose, but it soon started to decline once it became evident that the deal would not go through.
According to an analyst engaged by the shareholders, investor losses might have reached $12 billion.
In response to Mr. Musk’s tweets, the US Securities and Exchange Commission (SEC) sued him, alleging that he had misled investors. In exchange for $20 million, Mr. Musk consented to resign as chairman of the Tesla board.
Mr. Musk, who also oversees SpaceX and Twitter, had maintained during the three-week trial that he believed he had a verbal commitment for the sale from Saudi Arabia’s national wealth fund.
The second-richest man in the world testified for nearly nine hours, saying: “Just because I tweet something does not mean people believe it or will act accordingly.”
Investors objected that the phrase “financing secured” implied more than a verbal agreement.
Just A ‘Bad Tweet’?
Despite the fact that Tesla’s stock price soared following the tweet, Mr. Musk questioned if his tweets had any impact on Tesla’s stock price.
“At one point, I tweeted that I believed the stock price to be excessive… and it increased, which defies logic,” he added, claiming the stock price’s response to his tweets can fluctuate.
According to Mr. Musk, he ultimately decided against taking Tesla private after learning from his conversations with smaller investors that they preferred the company to stay publicly traded.
He was present for closing arguments earlier on Friday when the opposing legal teams painted conflicting portrayals of him, but he was not present when the verdict was announced.
The Tesla shareholders’ attorney, Nicholas Porritt, stated: “Our civilization is based on norms. To prevent chaos, we need regulations. Elon Musk should be subject to the same rules as everyone else.
Alex Spiro, Mr. Musk’s lawyer, stated: “Just because it’s a terrible tweet doesn’t mean it’s a scam.”
“We are dissatisfied with the judgement and are evaluating next options,” Mr. Porritt said following the decision.
While largely remaining composed during his hearing, Mr. Musk occasionally showed signs of irritation with the line of questioning.
There were also lighthearted moments. Elon Musk quickly changed his name on Twitter to the same handle when a lawyer for shareholders inadvertently referred to him as “Mr Tweet.”
In addition, a number of Tesla directors gave testimony, including James Murdoch, Rupert Murdoch’s son. They said that Mr. Musk could have reviewed buyout messages without the Tesla board’s approval.
The tweet about taking Tesla private, according to securities fraud attorney Reed Kathrein, was “as concrete a statement of taking a company private as there can be,” and the verdict of not guilty was “a travesty to investors and the securities laws,” he added.
