A US jury found on Friday that the CEO of Tesla Inc, Elon Musk, and his company were not liable for securities fraud in the case over Musk’s 2018 tweets alleging he had financing for the electric car company to go public.
The plaintiffs had sought billions in damages, and the decision had also been seen as important to Musk himself, who has aggressively defended his freedom to tweet widely.
The jury returned its verdict about two hours after deliberations began.
The world’s second-richest person has previously created legal and regulatory headaches for his sometimes impulsive use of Twitter, the social media company he bought for $44 billion in October.
Musk’s attention has been divided in recent months between Teslayour rocket company SpaceX and now Twitter. Tesla investors have raised concerns that the social media company’s management has taken up too much of their attention.
Tesla shareholders claim Musk misled them when he tweeted on August 7, 2018, that he was considering taking the company public at $420 a share, a premium of about 23% from the previous day’s close, and that it had “funding secured.”
They say Musk lied when he tweeted later that day that “investor support is confirmed.”
The share price soared after the tweets, and then fell again after August 17, 2018, when it became clear that the purchase would not go through.
A lawyer for the shareholders told the jury that the billionaire CEO is not above the law, and should be held responsible for the tweets.
“Ultimately, this case is about whether the rules that apply to everyone else should also apply to Elon Musk,” shareholder attorney Nicholas Porritt said during closing arguments.
An economist hired by the shareholders put the investors’ losses at $12 billion.
During the three-week trial, Musk spent nearly nine hours on the stand, telling jurors that he believed the tweets were true. He said he had secured the necessary financing, including a verbal commitment from Saudi Arabia’s sovereign debt fund, the Public Investment Fund. The fund later backed off its commitment, Musk noted.
Musk’s lawyer, Alex Spiro, said Musk’s “funding secured” tweet was “technically inaccurate” but that investors only cared that Musk was considering a purchase.
“The whole case is built on a poor choice of words,” he said. “Who cares about the poor choice of words?”
“Just because it’s a bad tweet doesn’t make it a fraud,” Spiro said during closing arguments.
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