Elon Musk Misled Twitter Shareholders, US Jury Finds

A US jury found Elon Musk liable for making misleading statements that drove down Twitter’s stock price before his 2022 acquisition, but cleared him of orchestrating a broader fraud scheme. Shareholders who sold stock during that period were awarded damages that could total about $2.5 billion, while Musk’s legal team plans to appeal the ruling.

A US federal jury on Friday found Elon Musk liable for misleading Twitter shareholders by deliberately attempting to push down the company’s stock price in the months leading up to his high-profile 2022 acquisition of the social media platform for $44 billion (€38 billion). The ruling represents one of the most significant legal judgments tied to Musk’s controversial takeover of the company and his conduct during that period.
Despite this finding, the jury stopped short of fully siding with the plaintiffs. It rejected key fraud allegations, determining that while Musk’s actions and public statements were misleading, they did not amount to a coordinated or intentional scheme to defraud investors. This distinction proved crucial in shaping the scope of the damages and the broader legal implications of the case.
The verdict was delivered in a San Francisco federal court following a closely watched civil trial that drew global attention due to Musk’s prominence and the scale of the acquisition. As one of the world’s wealthiest and most influential business figures, Musk’s business decisions and public communications often have significant market impact, a factor that played heavily into the case.
The dispute dates back to April 2022, when Musk agreed to acquire Twitter. Not long after announcing the deal, he began publicly questioning the accuracy of Twitter’s reported user data, particularly the number of fake and spam accounts—commonly known as bots—on the platform. These concerns quickly became central to his justification for attempting to renegotiate or withdraw from the deal.
Musk posted on Twitter that the acquisition was “temporarily on hold” pending verification that bots made up less than 5% of the platform’s user base. The statement sent shockwaves through the market, contributing to fluctuations in Twitter’s share price. In subsequent comments, including another tweet and statements made on a podcast, he suggested that the actual number of bots could be significantly higher—possibly exceeding 20%—and insisted that the deal could not proceed unless Twitter’s leadership substantiated its original figures.
These public remarks became a focal point of the lawsuit, as shareholders argued that they created uncertainty and drove down the stock price, prompting some investors to sell their shares at lower values. Musk’s attempt to back out of the acquisition further intensified the situation, leading Twitter to file a lawsuit in Delaware aimed at forcing him to honor the original agreement.
As the legal battle escalated, both sides prepared for a high-stakes trial. However, just before proceedings were set to begin, Musk reversed course once again and agreed to complete the acquisition under the initially agreed terms. He finalized the deal in October 2022 and later rebranded the platform as X, ushering in a series of sweeping changes to the company’s operations, policies, and branding.
In the aftermath, shareholders who believed they had suffered financial losses filed a class-action lawsuit against Musk. The case centered on whether his public statements—particularly two tweets and his podcast remarks in May 2022—constituted intentional market manipulation and securities fraud.
The trial, which lasted nearly three weeks beginning on March 2, featured testimony from several key figures, including former Twitter executives Parag Agrawal and Ned Segal. Both provided insight into the company’s internal processes and defended the accuracy of its reporting on bot accounts. Musk also took the stand, where he maintained that Twitter’s leadership had misled him and the public about the true scale of fake accounts on the platform.
He argued that his statements were made in good faith based on the information available to him and accused Twitter executives of withholding crucial data regarding how bot estimates were calculated. His defense sought to frame his actions as those of a concerned buyer attempting to verify the value of a major acquisition rather than someone deliberately manipulating the market.
After weighing the evidence, the jury concluded that Musk had indeed violated securities laws by making false or misleading statements that had the effect of artificially depressing Twitter’s stock price. This finding underscored the legal responsibility of high-profile individuals to ensure the accuracy of market-sensitive communications, particularly when they have the power to influence investor behavior.
However, the jury also found that the plaintiffs failed to prove a broader claim that Musk engaged in a deliberate and coordinated scheme to defraud shareholders. This partial victory for Musk limited the extent of his legal liability, even as it affirmed that his conduct crossed regulatory boundaries.
The lawsuit covers investors who sold Twitter shares between May 13 and October 4, 2022, a period during which Musk’s statements and actions were most impactful. According to the verdict, affected shareholders are entitled to damages estimated at between $3 and $8 per share per day. Lawyers representing the plaintiffs have suggested that the total payout could reach approximately $2.5 billion, making it one of the largest shareholder awards tied to a corporate acquisition dispute.
Joseph Cotchett, a lawyer for the plaintiffs, described the outcome as a meaningful win not only for Twitter investors but also for the integrity of public markets. He emphasized that the verdict sends a strong signal that even the most powerful individuals are subject to the rule of law and can be held accountable for actions that affect ordinary investors.
In response, Musk’s legal team from Quinn Emanuel Urquhart & Sullivan downplayed the significance of the ruling, calling it “a bump in the road.” They indicated that they plan to appeal the decision and expressed confidence that it will eventually be overturned, setting the stage for a continued legal battle that could further shape the boundaries of corporate accountability and market conduct.