US judge tosses out Musk’s bid to void Twitter fraud verdict
Jurors had found Twitter owner Musk liable for tweets in which he questioned whether the platform was overrun by fake and spam accounts that had
Jurors had found Twitter owner Musk liable for tweets in which he questioned whether the platform was overrun by fake and spam accounts that had led to a slump in share prices. A United States federal judge has rejected Elon Musk’s bid to void a jury verdict finding that Musk, the world’s richest person, defrauded Twitter investors by trying to drive down the social media company’s stock price after agreeing to a $44bn takeover. US District Judge Charles Breyer in San Francisco, California on Monday also denied Musk’s motion to decertify the class of investors, and granted the investors’ motion for prejudgment interest. The judge did, however, find Musk not liable for one of his challenged tweets. “Even if the speaker has a change of heart or a momentary regret about a transaction, such qualms do not justify lying to the investing public,” Breyer wrote. A lawyer for the investors had estimated following the March 20 verdict that damages could total about $2.6bn.
Lawyers for Musk did not immediately respond to requests for comment. Mark Molumphy, a lawyer for the investors, called it “a very good day” for investors in public markets, after jurors “rejected Musk’s effort to game that system”. Musk changed Twitter’s name to X, and it is now part of his rocket and satellite company SpaceX. He also faces a lawsuit in Manhattan in New York City claiming he defrauded Twitter investors by waiting too long to disclose his initial investment, letting him buy shares cheaply and causing them to sell at low prices. ‘Falsity’ Jurors found Musk liable for May 13 and May 17, 2022, tweets in which he questioned whether Twitter was overrun by fake and spam accounts, known as bots. The May 13 tweet said the purchase was “on hold” pending details on whether bots represented less than 5 percent of users. The second tweet said the percentage of bots could be much higher than 20 percent, and the purchase “cannot move forward” until Twitter’s chief executive proved it was under 5 percent.
Investors said Musk did this to force Twitter to renegotiate his offer, or let him back out. They also said the first tweet caused Twitter’s share price to fall 18 percent over two trading days, causing losses when they sold their shares at depressed prices. Breyer found “substantial evidence of falsity” in the May 13 tweet, and said, “A jury could conclude that Musk had a motive to get out of the existing deal and used bots as a pretext to do so.” The judge agreed with Musk that the lack of market reaction to the May 17 tweet meant it did not cause investors to lose money. ‘420’ claim Breyer also rejected Musk’s claim that jurors were “mocking” him and using the verdict to “send a message” by highlighting the figure “$4.20” in bright blue on the verdict form. The number 420 is associated with marijuana or cannabis culture, and Musk has often used it in interviews, tweets and in business activities.
The BriefWire