Elon Musk will appear in federal court in San Francisco, California on March 4, 2026.
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A California jury found that Elon Musk misled Twitter shareholders in the lead-up to his $44 billion acquisition of the social media company, according to a verdict issued Friday.
According to plaintiffs’ lawyers, total damages could reach up to $2.6 billion.
The class action lawsuit, Pampena v. Musk, was first filed in October 2022 after Musk completed his acquisition of Twitter for $54.20 per share. He then renamed Company X, which later merged with his artificial intelligence company, xAI, and then with his reusable rocket manufacturing company, SpaceX.
“This is a perfect example of what you can’t do to your average investor: people with 401ks, children, pension funds, teachers, firefighters, nurses,” Joseph Cotchet, an attorney for Twitter investors, told CNBC in a San Francisco courthouse. “That’s what this case is all about. This wasn’t about masks. It was about the whole operation.”
Musk’s lawyer declined to comment. His team is expected to appeal.
After Musk made his bid to buy Twitter in April 2022, his feelings about the deal quickly soured as he questioned the level of bots, spam and fake accounts on the platform. Musk wrote in a tweet the following month that the deal would be “temporarily put on hold” until Twitter’s CEO could certify that the level of fraudulent accounts was around the 5% reported in the company’s SEC filings.
Musk’s tweet and additional comments caused Twitter’s stock to drop nearly 10% in one session. The jury deliberated for four days and unanimously found Musk’s tweets from May 13 and May 17 to be materially false or misleading.
Former Twitter shareholders, including individual investors and options traders, argued that Mr. Musk’s comments amounted to a plan to pressure the board to sell to Mr. Musk at a lower price than originally offered. They claimed he was motivated by the drop in stock prices. teslaIn that case, it would have to sell even more of its automaker stock than it had intended to finance the acquisition.
Plaintiffs in the lawsuit said they sold their shares for less than $54.20 in response to Musk’s posts and comments during the press conference. The potential damages are based on experts’ estimates of how much Mr. Musk’s reversal affected stock prices during the class period.
Lawyers for Twitter’s investors said it would take about 90 days for claims management to begin, and then several months for the government to process the claims and for investors to begin recouping some of their losses.
Musk’s lawyers argued that their client’s comments were based on well-founded concerns about bots, spam and fake accounts on Twitter and did not amount to securities fraud or a plan to lower the company’s stock price.
The jury said Musk made false and misleading statements that harmed some Twitter shareholders, but did not engage in any specific scheme to defraud investors.
The ruling is a harsh rebuke to Musk, but the economic impact will be minimal given his net worth, which currently stands at about $650 billion, according to Bloomberg.
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