Elon Musk under scrutiny again as US judge upholds Twitter investor fraud verdict

Tech giant Elon Musk might be under scanner yet again as a US federal judge has refused to overturn a jury’s finding he misled Twitter investors during his 2022 takeover saga. This verdict could cost the billionaire billions of dollars in damages. In a ruling that was delivered on Monday (July 6), US District Judge Charles Breyer rejected Musk’s request to set aside the March jury verdict. The decision is another legal setback for Musk over his handling of the high-profile acquisition that eventually saw him purchase Twitter for $44 billion before renaming the platform X.

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What the latest verdict says?

The case centred on a series of posts Musk published in May 2022 after agreeing to acquire Twitter. Shareholders argued that his public comments questioning the prevalence of fake and spam accounts were designed to weaken the company’s market value and improve his bargaining position as he sought to renegotiate the deal or walk away from it altogether. A jury agreed with his argument in March, finding that Musk’s statements had misled investors who suffered losses after Twitter’s share price fell. Lawyers representing the shareholder class have estimated that the verdict, combined with prejudgment interest, could expose Musk to around $2.6 billion in damages. Mark Molumphy, counsel for the investors, welcomed the ruling, describing it as “a very good day."

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The ruling said that the evidence presented during the trial was sufficient for jurors to conclude that Musk’s first disputed post was false and that concerns over automated accounts could reasonably be viewed as a pretext for escaping the original acquisition agreement. “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. However, the judge reached a different conclusion regarding another post published days later. Because the investors failed to show that the second message had a measurable impact on Twitter’s market value, Breyer ruled that Musk could not be held liable for that particular statement. Breyer also rejected Musk’s argument that the jury’s verdict had been influenced by bias. Musk’s lawyers had pointed to the appearance of “$4.20”, highlighted in blue on the verdict form, claiming it demonstrated that jurors were mocking the billionaire and attempting to “send a message”.