Elon Musk, the founder of Tesla, has been acquitted of all charges related to a tweet in which he claimed to have “financing secured” to return the electric vehicle manufacturer to private ownership.
Investors said he misled them with his articles in August 2018 and that as a result, they had lost billions of dollars.
The planned $72 billion (£60 billion) takeover never happened. Musk might have had to pay billions of dollars in damages if proven at fault.
The nine jurors took less than two hours on Friday afternoon to decide on the class-action complaint.
Mr. Musk, who had said he couldn’t obtain a fair trial in San Francisco and wanted the problem transferred to Texas, where Tesla is based, applauded the verdict.
He commented on Twitter, the social media site he paid $44 billion for in October: “Thank goodness, the people’s wisdom has won!
“I am really grateful for the jury’s unanimous decision to declare the defendants innocent in the Tesla 420 take-private case.”
Mr. Musk’s tweet from August 7, 2018, which is central to the complaint, reads: “At $420, I’m thinking about taking Tesla private. funding arranged.”
When Mr. Musk tweeted later in the day that “investor support is confirmed,” the plaintiffs claimed he had lied.
Following the tweets, the stock price rose, but it soon started to decline once it became evident that the deal would not go through.
When many people made decisions about purchasing and selling their shares based on the tweet, investor losses were estimated as high as $12 billion, according to an economist hired by the shareholders.
In response to Mr. Musk’s tweets, the US Securities and Exchange Commission (SEC) sued him, alleging that he had misled investors. In exchange for $20 million, Mr. Musk consented to resign as chairman of the Tesla board.
Mr. Musk, who also oversees SpaceX and Twitter, had maintained during the three-week trial that he believed he had a verbal commitment for the sale from Saudi Arabia’s national wealth fund.
The second-richest man in the world testified for nearly nine hours, saying: “Just because I tweet something does not mean people believe it or will act accordingly.”
Investors objected that the phrase “financing secured” implied more than a verbal agreement.
Just a ‘bad tweet’?
Despite the fact that Tesla’s stock price soared following the tweet, Mr. Musk questioned if his tweets had any impact on Tesla’s stock price.
He said that the impact his tweets had on the stock price can be unpredictable: “At one time I tweeted that I thought that, in my perspective, the stock price was too high… and it moved higher, which is counterintuitive.”
According to Mr. Musk, he ultimately decided against taking Tesla private after learning from his conversations with smaller investors that they preferred the company to stay publicly traded.
He was present for closing arguments earlier on Friday when the opposing legal teams painted conflicting portrayals of him, but he was not present when the verdict was announced.
An attorney for the Tesla stockholders, Nicholas Porritt, stated: “Our society is governed by laws. To prevent chaos, we need regulations. Elon Musk should be subject to the same rules as everyone else.”
Alex Spiro, Mr. Musk’s lawyer, stated: “Just because it’s a terrible tweet doesn’t mean it’s a scam.”
“We are dissatisfied with the judgment and are evaluating the next options,” Mr. Porritt said following the decision.
While largely remaining composed during his hearing, Mr. Musk occasionally showed signs of irritation with the line of questioning.
There were also lighthearted moments. Elon Musk quickly changed his name on Twitter to the same handle when a lawyer for shareholders inadvertently referred to him as “Mr. Tweet.”
In addition, a number of Tesla directors gave testimony, including James Murdoch, Rupert Murdoch’s son. They said that Mr. Musk could have reviewed buyout messages without the Tesla board’s approval.
The tweet about taking Tesla private, according to securities fraud attorney Reed Kathrein, was “as concrete a statement of taking a company private as there can be,” and the verdict of not guilty was “a travesty to investors and the securities laws,” he added.
