Jury Finds Elon Musk Not Liable In 'Funding Secured' Twitter Fraud Trial
Elon Musk has just been granted a major legal relief over his controversial "funding secured" tweet from 2018, which had been portrayed as fraudulent in nature by a group of Tesla investors and responsible for triggering massive losses. A jury in San Francisco, CA, found that the controversial executive did not willfully violate federal securities laws with his tweet, nor was he the catalyst for any subsequent financial loss for investors.
It was not Musk's first run in with authorities over allegations of Twitter misuse. Back in 2018, Musk had to cough up $20 million in settlement fine following a securities fraud charge brought against him by the US Securities and Exchange Commission over the same tweet. In the years that followed, Musk has publicly criticized the SEC on multiple occasion,s and has even claimed that he was pressured into settling with the agency.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Musk had earlier told the court that the figure of $420 per share quoted by him in his tweet was not a joke. The Tesla chief reasoned that, after factoring in a 20% rise in the Twitter share price at the time that finally landed at a value of $419.50, he simply rounded it off to $420. However, Musk hasn't explained if there was any similar financial algebra involved when he floated the $54.20 share purchase price for Twitter, which multiple analysts have called over-inflated and way over the real worth of Twitter's stock.
Absolutely truthful, claims Musk
The latest verdict pronounced by a federal court in San Francisco clears Musk of any securities law violation, and as such, he is no longer liable to pay billions of dollars in damages to plaintiffs. The shareholders had originally accused Musk of causing them steep financial losses over rushed sales in the days following his tweet which caused massive fluctuations in Tesla's stock value. Following his victory, Musk tweeted that "the wisdom of the people has prevailed!"
Thank goodness, the wisdom of the people has prevailed!
I am deeply appreciative of the jury’s unanimous finding of innocence in the Tesla 420 take-private case.
— Elon Musk (@elonmusk) February 3, 2023
Musk had previously told the court that he was in talks with the Saudi sovereign wealth fund over a considerable investment that would allow him to take Tesla private. However, Musk abandoned those plans just over a week later without publicly disclosing why. During the court proceedings, Musk revealed that his potential backer(s) reneged on their commitment. The commitment was only verbal, and Musk didn't get anything in writing, according to a report from Bloomberg.
Musk was reportedly willing to offload his personal stake in SpaceX to support his strategy of taking Tesla private, but those plans never actually materialized. On the contrary, Musk has relied on billions-worth of his Tesla shares to fund his $44 billion purchase in the past few months, with Twitter suffering financially following an advertiser exodus and several botched product decisions.