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SAN FRANCISO — A jury decided Friday that Elon Musk did not mislead investors with his 2018 tweets about electric carmaker Tesla.
The verdict of the nine jurors was reached after less than two hours of deliberation following a three-week trial and represents a big vindication for Musk.
The lawsuit pitted Tesla investors represented in a class action lawsuit against Musk, who is the CEO of both the electric carmaker and the Twitter service it bought for $44 billion a few months ago.
In 2018, Musk tweeted that he had the funding to take Tesla private even as it turned out he hadn’t gotten a hard-and-fast commitment to a botched deal that would cost $20 billion to $70 billion to complete.
Musk’s integrity was on the line at trial and part of a fortune that made him one of the richest people in the world. He would have been billed for billions of dollars in damages if the jury found him liable for 2018 tweets that had already been found false by the presiding judge.
On Friday, Musk sat stoically in court, as he was both vilified as a wealthy narcissist whose reckless behavior risks ‘anarchy’ and hailed as a visionary who cares for the ‘little guy’ in closing trial arguments .
The trial hinged on whether Musk’s tweet in 2018 misled Tesla shareholders, steering them in a direction they said would cost them billions of dollars. The civil suit centered around two tweets Musk posted on Aug. 7, 2018 about a Tesla takeover that never happened.
Alex Spiro, Musk’s attorney, admitted the 2018 tweets were “technically inaccurate.” But he told jurors, “Just because it’s a bad tweet doesn’t make it a fraud.”
The first tweet, posted shortly before boarding his private jet, Musk said he did “guaranteed financing” take private Tesla. A few hours later, Musk sent another tweet indicating that business was imminent.
The tweets sent Twitter stock surging during a 10-day period covered by the lawsuit before pulling out after Musk walked out of a deal in which he never had a firm financial commitment, based on evidence presented during the three-week trial .
Musk’s decision to appear for the closing arguments – even though his presence was not required – underscored the importance of the outcome of the trial to him.
Nicholas Porritt, a Tesla shareholder attorney, urged jurors to reprimand Musk for his “loose relationship with the truth.”
“Our society is rules-based,” Porritt said. “We need rules that save us from anarchy. The rules should apply to Elon Musk like everyone else.”
Alex Spiro, Musk’s attorney, admitted the 2018 tweets were “technically inaccurate.” But he told jurors, “Just because it’s a bad tweet doesn’t make it a fraud.”
US District Judge Edward Chen, who presided over the trial, ruled last year that Musk’s 2018 tweets were false and instructed the jury to view them that way.
During about eight hours on the witness stand at the start of the trial, Musk insisted that he had aligned funds from Saudi Arabia’s Public Investment Fund to take Tesla private after eight years as a public company. He defended his initial August 2018 tweet as well-intentioned and aimed at ensuring that all Tesla investors know the automaker may be on its way to ending its run as a public company.
“I had no bad motives,” Musk testified. “My intent was to do the right thing for all shareholders.”
Spiro echoed that theme in his closing argument.
“He was trying to include the retail shareholder, the mom and pop, the little guy, and not take more power for himself,” Spiro said.
Porritt, meanwhile, scoffed at the notion that Musk might have concluded he had a firm commitment after a 45-minute meeting at a Tesla factory on July 31, 2018, with Saudi Arabian wealth fund governor Yasir al-Rumayyan, since there was no written documentation.
A text message al-Rumayyan sent in late August that forms part of the trial evidence also indicated that the Saudi fund was only interested in learning more about Musk’s proposal to take Tesla private at a time when the company it was valued at about $60 billion.
“A financial pledge of $60 billion was apparently obtained and nobody wrote a single word,” Porritt said, saying that amount was more than the combined economic output of Nicaragua, Honduras and El Salvador.
“Apparently Elon Musk thinks it’s easier to get billions of dollars in financing than a car loan or a mortgage,” added Pollitt.
Spiro, however, pointed to Musk’s track record of helping start and manage a list of companies that include digital payments pioneer PayPal and rocket maker SpaceX, as well as Tesla. The Austin, Texas-based automaker is now worth nearly $600 billion, despite a sharp drop in its stock price last year amid concerns that Musk’s Twitter purchase distracted him from Tesla.
Recalling Musk’s roots as a South African immigrant who came to Silicon Valley to create disruptive tech companies, Spiro described his client “as the kind of guy who believes the impossible is possible.”
Porritt put a different spin on Musk’s mindset during his presentation. “For Elon Musk, if he believes it, or even thinks about it, it’s true.”
In his closing remarks, Porritt told jurors their decision will come down to their answer to one question: “Do the rules apply to everyone, or can Elon Musk do whatever he wants and not face the consequences?”
