Elon Musk has been found not liable in a securities fraud trial in a class-action lawsuit centered around the now-infamous Tesla CEO’s infamous “Funds Secured” tweet.
After deliberating for less than 90 minutes, the jury announced its verdict in a trial that began in San Francisco three weeks ago. As a result of the lawsuit, Tesla’s stock price climbed about 1.5% in after-hours trading to $189.98.
Musk tweeted on friday Following the jury verdict: “Well done, the wisdom of the people won! We are deeply grateful for the unanimous jury acquittal of the Tesla 420 in a closed case.”
At the heart of the lawsuit is Musk’s liability for losses suffered by shareholders after Musk posted several messages on Twitter in August 2018 saying he had secured funds to take Tesla private. was whether or not to bearMusk first tweeted “We are considering taking Tesla private for $420. Funding secured.” Another pair Tweet soon It went on to: “Investor support has been confirmed. , “If we took it private, no shareholder would think they had it.”
Plaintiffs’ attorneys representing the investors claimed that those shareholders suffered financially as a result. Musk, Tesla and their boards faced billions in damages.
The trial was not about determining whether those tweets were true. That question was already answered. The federal judge overseeing the case, Edward M. Chen, ruled that the tweets were false and that Musk was reckless for posting them.
The three-week trial was largely a tug-of-war over language and intent.
Attorney Nicholas Porritt, who presided over plaintiffs’ closing arguments, argued that the company was far from reaching an agreement to take it private when Musk posted the tweet, citing emails and texts that were used to reach an agreement. It proved that there was not even an agreement or framework for
“For Elon Musk, if he just thought about it and believed it, no matter how objectively wrong or exaggerated it was, it was true,” said Pollitt. It might work in business, that’s not the issue in this court, but it doesn’t work in the stock market or in public companies, where the stock market has rules that dictate what you can say and what you can’t say. One of the rules is that what you say must be true and accurate.”
Alex Spiro, who represented Musk, countered this, saying that fundraising wasn’t an issue at all and that Musk knew he could achieve it if he wanted to. Instead, Spiro pointed to a blog post weeks after his Musk tweet, explaining that Musk would not take Tesla private.
Musk avoided a large damages claim, but the funded tweet cost him.
The U.S. Securities and Exchange Commission filed a complaint in September 2018, alleging that Musk lied when he tweeted that he had “secured funds” to privately buy the company for $420 per share. Did. The complaint was filed after Musk and Tesla’s boards of directors abruptly pulled out of their agreement with the SEC. The board not only withdrew the agreement, but issued a bold statement in support of Musk after the lawsuit was filed.
A settlement was eventually reached, but with harsher penalties than the original agreement. In his settlement reached on Sept. 29, Musk resigned as Tesla chairman and agreed to pay a $20 million fine. Tesla agreed to pay a separate $20 million breakup fee.
