Elon Musk’s 2018 tweet did not deceive shareholders, according to the nine-person jury.
A Lawsuit Against Musk
A class-action lawsuit was filed against Elon Musk on behalf of Tesla shareholders. According to the shareholders, he misled them with his tweets in 2018, as the $72 billion buyout never happened.
The final day of the lawsuit was held by nine jurors, who reached a verdict in just two hours. If he was found liable, then he could have been ordered to pay at least billions of dollars in damages.
Reason for the Lawsuit
On August 7, 2018, Elon Musk, the CEO of Tesla and SpaceX, tweeted about potentially taking Tesla private at $420 per share and that he had the funding secured. Later that day, Musk tweeted that investor support had already been confirmed.
The Securities and Exchange Commission (SEC) filed a lawsuit against Elon Musk for violating securities law with this tweet, as it caused Tesla’s stock price to temporarily soar. The lawsuit alleged that the tweet was false and misleading and that Musk did not have sufficient funding secured to follow through with the plan.
According to the shareholders, their losses were as high as $12 billion. Eventually, Musk and the SEC reached a settlement, where he agreed to step down as the chairman of Tesla’s board for at least three years, pay a $20 million fine, and have his tweets regarding Tesla’s finances monitored by a lawyer.
Three Week Trial
The trial went on for three weeks. Elon Musk argued that he had a verbal agreement with Saudi Arabia’s sovereign wealth fund for the deal. Musk also argued that just because he tweeted something does not mean people will believe it or act accordingly.
From the shareholders’ side, Nicholas Porritt reasons that a society is made up of rules because they are needed to keep the society from falling into chaos. And these rules should apply equally to people like Elon Musk.
Porritt’s Attack on Musk
During the trial, he testified that he never had any ill motive and had always wanted to do the right thing for all shareholders. Musk’s attorney, Alex Spiro, similarly stated the same thing during the closing statement, saying that Musk was trying to include everyone and was not trying to seize power for himself.
Nicholas Porritt stated that it’s absurd to think that Musk could have concluded that he had a commitment just after a 45-minute meeting, and that too without any written agreement. Musk met Yasir al-Rumayyan, governor of Saudi Arabia’s wealth fund, at a Tesla factory on July 31, 2018.
A part of the evidence shows that a text message sent by Yasir al-Rumayyan indicated that he was only interested in learning about Musk’s idea of taking Tesla private. Porritt also attacked Musk, he said that Musk thinks getting a $60 billion commitment is far easier than getting a mortgage, hence he never got any written commitment.
Musk’s lawyer pointed to Musk’s ability to start and list a number of companies and recalled his roots as a South African immigrant who came to Silicon Valley to create a revolution. Spiro painted Musk as a person who believes the impossible is possible.
Elon Musk is known for his ability to run multiple companies at once. He is the CEO of Tesla, SpaceX, Neuralink, and The Boring Company and has been involved in other ventures as well, including digital payment pioneer PayPal. Despite running multiple companies, Musk is known for his intense work ethic and has said in the past that he works up to 100 hours a week.
The trial’s fate was decided in the federal courthouse in San Francisco. The deliberations by Jury took less than two hours before they reach the verdict. They pronounced Musk not guilty and that he didn’t deceive investors with his tweets.
Musk was not present in the court but he soon tweeted that he was deeply appreciative of the jury’s decision. And that the wisdom of people has prevailed. The shares of Tesla rose by 1.6% in after-trading hours following the jury’s verdict.
Some jurors met with Tesla’s shareholders and told them that they had doubts that Tesla’s shares fluctuated not only because of a tweet by Musk.