Elon Musk, founder of Tesla, was cleared of any wrongdoing related to a tweet he posted in August 2018. The tweet stated that he had “funding secured” to take the electric car manufacturer private, a proposed $72 billion buyout that ultimately did not occur.
Shareholders filed a class-action lawsuit claiming that Musk’s tweets misled them and resulted in billions of dollars in losses. The jury reached its verdict in under two hours, finding Musk innocent.
The US Securities and Exchange Commission (SEC) had previously sued Musk over the tweets, accusing him of lying to investors. He agreed to step down as board chairman of Tesla and settled for $20 million.
During the trial, Musk argued that he thought he had a verbal commitment from Saudi Arabia’s sovereign wealth fund for the deal. The share price of Tesla increased after the tweet, but quickly dropped as it became clear the buyout would not happen.
Nicholas Porritt, a lawyer for the Tesla shareholders, expressed disappointment with the verdict, while Musk’s attorney, Alex Spiro, stated that just because a tweet is “bad” does not make it fraudulent.
Several Tesla directors, including James Murdoch, testified in the case. The verdict was met with mixed reactions, with securities fraud lawyer Reed Kathrein calling it “a travesty to investors and the securities laws”.
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