A U.S. jury decided on Friday that Tesla (NASDAQ:TSLA) Inc. CEO Elon Musk and his company are not responsible for misleading investors when Musk tweeted in 2018 that he had “funding secured” to take the electric car company private.
Plaintiffs had asked for billions of dollars in damages, and the decision was also thought to be important for Musk, who often uses Twitter to say what he thinks.
After talking for about two hours, the jury came back with a decision that everyone agreed on.
Musk wasn’t in court when the jury’s decision was read, but he tweeted soon after that he was “deeply appreciative” of it.
“Thank God, the people’s sense has won out,” he said.
Related: Elon Musk’s team is looking for more money for Twitter.
In a statement, the investors’ lawyer, Nicholas Porritt, said, “We are disappointed with the verdict and are thinking about what to do next.”
After hours of trading after the verdict, shares of Tesla went up 1.6%.
Wedbush analyst Dan Ives said, “A dark chapter is now over for Musk and Tesla.” Ives also said that some Tesla investors were worried that Musk might have to sell more Tesla stock if he lost.
The second-richest person in the world has caused legal and regulatory problems in the past by acting impulsively on Twitter, which he bought for $44 billion in October.
Minor Myers, who teaches business law at the University of Connecticut and had said before that the investors’ case was strong, said that the result was “astonishing.”
People have always thought that the U.S. law against securities fraud was a great way to stop lies and misstatements, he said. “This outcome makes you wonder if it is up to the job in modern markets,” he said, adding that Musk himself was likely to “double down” on his communication tactics after the verdict.
In the past few months, Musk has been busy with Tesla, his rocket company SpaceX, and now Twitter. Investors in Tesla are worried that running the social media company has taken up too much of Musk’s time and attention.
“BAD WORD CHOICE”
Tesla shareholders said Musk lied to them when he tweeted on August 7, 2018, that he was thinking about taking the company private at $420 per share, which was a 23% increase from the day before, and that he had “funding secured.”
They say that Musk lied later that day when he tweeted that “investor support is confirmed.”
After the tweets, the stock price went up, but it went down again after August 17, 2018, when it became clear that the buyout wouldn’t happen.
Porritt said that the billionaire CEO is not above the law and should be held responsible for the tweets during the closing arguments.
“This case is really about whether Elon Musk should have to follow the same rules as everyone else,” he said.
Musk’s lawyer, Alex Spiro, said that Musk’s tweet about “funding secured” was “technically wrong,” but that investors only cared that Musk was thinking about selling Tesla.
He said, “The whole case is based on bad word choice.” “Who cares if you choose the wrong words?”
During closing arguments, Spiro said, “Just because it’s a bad tweet doesn’t make it a lie.”
An economist hired by the investors estimated that investors could lose as much as $12 billion.
During the three-week trial, Musk testified for almost nine hours and told the jury that he thought the tweets were true. He said he had the money he needed, including a verbal promise from the Public Investment Fund, which is Saudi Arabia’s sovereign wealth fund. Musk said that the fund later changed its mind about its promise.
Related: Bizarre $600K Elon Musk’s plan to sell things with a crypto-statute doesn’t work.
Musk later said in court that he thought he could have sold enough shares of his rocket company, SpaceX, to pay for a buyout. He said he “felt funding was secured” if he had only sold SpaceX stock.
Musk said in court that he sent the tweets to level the playing field between small shareholders and big investors who already knew about the deal. But he said he didn’t have official support from the Saudi Fund or other possible backers.
The verdict is another win for Musk and his lawyer, Spiro. In 2019, they beat the billionaire in a defamation case because he called a cave explorer a “pedo guy” in a tweet.
