US District Court Judge in San Francisco, Charles Breyer, kept the main part of the ruling, considering that Musk had provided misleading information in one of his influential tweets, but in return, he exempted him from legal responsibility for another tweet, after he saw that it did not cause financial losses to investors.
Breyer said in his decision that “a speaker’s change of mind or feeling of remorse about a deal does not justify lying to investors,” stressing that the evidence was sufficient to support the jury’s conclusion regarding one of the disputed tweets.
The case dates back to May 2022, when Musk published tweets questioning the rate of fake accounts and spam on the Twitter platform, weeks after he agreed to buy the company.
On May 13, Musk announced that the acquisition deal had become “on hold” until it was verified that the fake accounts represented less than 5% of users, then he returned on May 17 to confirm that the deal “should not go ahead” before proving this percentage.
Investors saw that these statements were nothing but an attempt to pressure Twitter management to renegotiate the value of the deal or withdraw from it, noting that the first tweet led to the company’s shares falling by about 18% within two trading days, causing huge losses to the shareholders who sold their shares after this decline.
The judge considered that there was “substantial evidence” that the May 13 tweet was misleading, and that the jury could have concluded that Musk used the issue of fake accounts as an excuse to back out of the deal after he lost his enthusiasm for completing it.
In contrast, Breyer agreed that the May 17 tweet had no material impact on the stock price, and therefore Musk could not be held liable for the associated losses.
Following the jury’s ruling on March 20, investors’ lawyers estimated the potential damages at about $2.5 billion.
There was no immediate comment from Musk’s lawyer or investor representatives regarding the court’s decision.
It is noteworthy that Musk later completed the acquisition of Twitter, before changing the name of the platform to “X”. He is also still facing a separate lawsuit in Manhattan, accusing him of delaying in disclosing his initial investment in Twitter shares, which, according to the lawsuit, enabled him to buy shares at prices lower than their true value. A federal judge on Monday rejected Elon Musk’s request to overturn a jury ruling that ruled that the richest man in the world deceived Twitter investors by trying to reduce the company’s stock price after agreeing to a takeover deal worth $44 billion.
However, US District Court Judge Charles Breyer in San Francisco acquitted Musk of responsibility for one of his disputed tweets.
“Even if a speaker changes his mind or feels temporary remorse about a deal, these concerns do not justify lying to investors,” Breyer wrote.
Following the ruling on March 20, the investors’ lawyer estimated that the total damages could reach approximately $2.5 billion.
Musk’s lawyers have not yet responded to requests for comment. Investors’ lawyers have not yet responded to similar requests.
Musk changed the name of Twitter to X, and it is now part of his rocket and satellite company, SpaceX. Musk is also facing a lawsuit in Manhattan accusing him of defrauding Twitter investors by delaying in disclosing his initial investment, which allowed him to buy shares at low prices and later sold them at low prices.
The jury convicted Musk of manipulating two tweets he posted on May 13 and 17, 2022, in which he asked whether Twitter was suffering from the spread of fake accounts and spam.
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The May 13 tweet said the purchase was “on hold” pending details on whether the percentage of fake accounts and spam represented less than five percent of users, while the May 17 tweet said the purchase “should not go forward” until the Twitter CEO proves that the percentage is less than five percent.
Investors said Musk did this to force Twitter to renegotiate its offer, or allow it to back away from it. They also said that the first tweet caused Twitter’s stock price to drop 18 percent over two trading days, resulting in losses when their shares were sold at low prices.
Breyer found “substantial evidence of falsity” in the May 13 tweet, and said that “a jury can conclude that Musk had a motive to withdraw from the existing deal, and used fake accounts and spam as a pretext.”
Judge Musk agreed that the lack of market reaction to the May 17 tweet meant it did not cause investors to lose money.
