U.S. Court Rejects Musk Challenge to Twitter Fraud Ruling
Synopsis
The decision preserves a jury verdict in favour of Twitter investors, with potential damages estimated at up to $2.6 billion.
The Musk Twitter fraud verdict ruling withstanding has left in place a jury verdict that ruled Elon Musk lied to Twitter investors when he acquired the company in 2022, which could lead to damages of approximately US$2.6 billion before interest.
A U.S. District Judge in San Francisco also granted prejudgment interest in his ruling, which would further magnify the amount of damages an investor might be able to recover if they ultimately prevail.
Court Upholds Jury Findings
Breyer has denied both of Musk's motions to set aside the March jury verdict or to decertify the class of investors suing him.
After agreeing to acquire the company for $44 billion, the judge concluded that enough evidence existed for jurors to conclude that Musk's May 13, 2022 post, which said the Twitter purchase was temporarily on hold, led investors to believe that it was on hold.
In a separate ruling 4 days later, the court determined that a post from the same Musk did not impact Twitter's stock price, and that he is not liable. Breyer also brushed aside claims the jury was biased, pointing out they took several days in deciding the case and gave some of the claims to Musk.
Wider Market Context
The lawsuit focuses on comments that investors said caused Twitter's stock price to zigzag during its questioning of the estimate for fake and spam accounts by Musk. One of the key pieces of the investors' case was the 18% drop in Twitter shares over two trading sessions after a post by Musk on May 13.
The decision is Australian and U.S. investors in the nation's largest deals face continued scrutiny of market disclosures.
The regulators, such as the U.S. Securities and Exchange Commission (SEC) and the Australian Securities and Investments Commission (ASIC), have placed increasing emphasis on timely and accurate market communication, especially if the public statement could have an impact on the value of the listed companies.
In October 2022, Musk finalized the purchase of Twitter, and changed its name to X. He is also separately suing over disclosures made before he bought his first Twitter stock before making the takeover offer.
Source: Reuters
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Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
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