A jury deliberated for about an hour, then concluded that Tesla CEO Elon Musk is “not responsible” for the losses suffered by investors who accused him of fraud based on his August 2018 tweets that he was thinking. to privatize the company, adding that “the funds are secured. ”, according to reports from The New York Times and CNBC.
The deliberation was exceptionally fast. While the cases can be difficult to compare directly, juries spent days deliberating verdicts to elizabeth holmes and Martin Shkreli, who were tried for fraud. Musk’s decision took a fraction of that time.
“We are still considering the next steps,” Nicholas Porritt, a lawyer for the plaintiffs, said in an email.
With Musk in attendance, the jury in the billionaire’s securities fraud trial heard closing arguments from a lawyer representing a class of Tesla investors who say they suffered heavy losses as a result of Musk’s tweet. They also heard from Musk’s lawyers, who claimed that whatever he was guilty of was a “poor choice of words.” His decision allows Musk to walk away unscathed rather than pay billions of dollars in damages.
For weeks, the jury has heard a litany of witnesses, including Musk himself, recount the events leading up to and following the Aug. 7, 2018 tweet.
Musk claimed that meetings with Saudi Arabia’s sovereign wealth fund left him convinced he would have the funds to take Tesla private. But within weeks, Musk backed out of the deal, leaving some Tesla investors billions of dollars in the hole. But even before they heard from the witnesses, District Court Judge Edward Chen instructed the jury that they should find Musk’s tweet false, leaving them to decide whether Musk knowingly misled shareholders, causing them to lose money.
Musk previously agreed to a $40 million settlement with the Securities and Exchange Commission for the tweet, which required him to resign his position as company president but not admit to any wrongdoing. (Musk has since argued that he was coerced into the deal.)
In his closing argument, the plaintiffs’ attorney, Porritt, said Musk must be held accountable for the tweets that were already deemed false. “Ultimately, this case is about whether the rules that apply to everyone else should also apply to Elon Musk,” Porritt argued. “Billionaires can’t operate under a different set of rules.”
Porritt led the jury through testimony from the Tesla investors who brought the lawsuit, as well as several expert witnesses who presented data that he said showed how stock price fluctuations in the Aug. 7 tweet and their surroundings led them to lose money.
“Elon Musk posted tweets that were false, with a reckless disregard for the truth,” Porritt said. “And those tweets did damage to investors, a lot of damage. That’s all it takes to find accountability here.”
“Just because it’s a bad tweet doesn’t make it a fraud.”
Investment bank witnesses previously testified that days after the tweet, they were still trying to determine how the deal would be structured. Musk had testified that, even without the Saudi money, he believed he could take Tesla private with his own wealth, including his stake in his private space company SpaceX, as the basis of the deal.
But Porritt called Musk’s tweet “a lie,” proven by text messages between the Tesla CEO and Yasir Al-Rumayyan, the governor of Saudi Arabia’s Public Investment Fund. Musk tried to intimidate the Saudi official and threatened to cut him off unless he publicly affirmed the private agreement, the lawyer said.
“Billionaires can’t operate under a different set of rules.”
Tesla should also be held liable, he argued, due to the conscious decision to allow Musk and his Twitter account to serve as the primary source of corporate communication. “Tesla consciously chose to make Elon his public face,” Porritt said, “and specifically his Twitter account as the primary source of news and information. [source].”
By comparison, Spiro’s closing argument was lengthy and difficult to follow at times, making several references to Musk as a “kid on a witness stand” or a “kid from South Africa”. (Musk is 51 years old.)
Spiro’s central argument was based on convincing the jury to believe that Musk tweeted “funding secured” because he sincerely believed he would have “ample funding” to take Tesla private. The tweet was “technically inaccurate,” Spiro acknowledged, but not a fraud.
“Just because it’s a bad tweet doesn’t make it a fraud,” Spiro said.
“Elon Musk posted tweets that were false, with a reckless disregard for the truth.”
“I think I heard [Porritt] Say you have to assume that Elon Musk committed fraud. Well, he didn’t. Not even close,” Spiro said. “Elon Musk was considering taking Tesla privately, and he could have done it. Funding was not a problem, that is the fundamental truth, which will never change.”
Holding Musk responsible for fluctuations in Tesla’s shares would represent a fundamental misunderstanding of how the market works, Spiro argued. “Stocks move all the time for many reasons,” he said. “They want to punish Musk for using two words, but they move all the time.”
Spiro told jurors they don’t have to like Musk or his tweets to find the lawsuit without merit. “Some of his tweets I don’t like either,” Spiro concluded.
Before the lawyers began their presentations, musk laughed in a joke made by Chen about whether it is “metaphysically possible” for the plaintiffs to prove a “material misrepresentation.” He also apparently offered his help when the court was experiencing IT problems.
But minutes before the jury was set to sit, Musk wasn’t thinking about his own fate or the outcome of the case. He was tweeting on Twitter.
Update February 3, 6:40 pm ET: Updated to reflect the jury’s ruling and cheep by Elon Musk.
