A jury in the United States has decided on Friday that Elon Musk did not deceive investors with his 2018 tweets about electric automaker Tesla.
The verdict represents a major vindication for Musk, the CEO of Tesla and Twitter, a social media service he bought for $44bn a few months ago. The nine jurors reached their decision after less than two hours of deliberation, following a three-week trial that pitted Tesla investors, represented by a class-action lawsuit, against Musk.
In 2018, Musk tweeted that he had the financing to take Tesla private, even though he had not gotten an iron-clad commitment for a deal that would have cost $20bn to $70bn to pull off.
Musk’s integrity was at stake at the trial, as well part of the fortune that has established the Tesla CEO as one of the world’s richest people. He could have been saddled with a bill for billions of dollars in damages had the jury found him liable for the 2018 tweets that were already deemed falsehoods by the judge presiding over the trial.
Earlier on Friday, Musk sat stoically in court as closing arguments were presented in the trial. Representatives for the plaintiffs vilified him as a rich narcissist whose reckless behavior risks “anarchy”, while defence lawyers hailed him as a visionary looking out for the “little guy”.
The trial hinged on whether Musk’s tweeting in 2018 misled Tesla shareholders, steering them in a direction that they argue cost them billions of dollars. The civil case centered on two tweets Musk posted August 7, 2018 about a Tesla buyout that never happened.
In the first tweet, posted just before he boarded his private jet, Musk declared he had “funding secured” to take Tesla private. A few hours later, Musk sent another tweet indicating that the deal was imminent.
The tweets caused Twitter’s stock to surge during a 10-day period covered by the lawsuit, before falling back after Musk abandoned a deal in which he never had a firm financing commitment, based on evidence presented during the three-week trial.
Musk’s decision to show up for the closing arguments — even though his presence wasn’t required — underscored the importance of the trial’s outcome to him.
Nicholas Porritt, a lawyer for the Tesla shareholders, urged the jurors to rebuke Musk for his “loose relationship with the truth”.
“Our society is based on rules,” Porritt said. “We need rules to save us from anarchy. Rules should apply to Elon Musk like everyone else.”
Alex Spiro, Musk’s lawyer, conceded the 2018 tweets were “technically inaccurate”. But he told the jurors, “Just because it’s a bad tweet doesn’t make it a fraud.”
US District Judge Edward Chen, who presided over the trial, decided last year that Musk’s 2018 tweets were false and has instructed the jury to view them that way.
During roughly eight hours on the stand earlier in the trial, Musk insisted that he believed he had lined up the funds from Saudi Arabia’s Public Investment Fund in order to take Tesla private, after eight years as a publicly held company. He defended his initial August 2018 tweet as well-intentioned and aimed at ensuring all Tesla investors knew the automaker might be on its way to ending its run as a publicly held company.
“I had no ill motive,” Musk testified. “My intent was to do the right thing for all shareholders.”
Spiro echoed that theme in his closing argument.
“He was trying to include the retail shareholder, the mom and pop, the little guy, and not seize more power for himself,” Spiro said.
Porritt, meanwhile, scoffed at the notion that Musk could have concluded he had a firm commitment, given there was no written documentation of his 45-minute meeting with Yasir al-Rumayyan, governor of Saudi Arabia’s wealth fund, at a Tesla factory on July 31, 2018.
A text message that al-Rumayyan sent later in August, part of the trial’s evidence, also indicated that the Saudi fund was only interested in learning more about Musk’s proposal to take Tesla private. The company, at the time, was valued at about $60bn.
“Apparently a $60bn financing commitment was obtained and no one wrote down a single word,” Porritt said. He asserted that that amount was larger than the combined economic output of Nicaragua, Honduras and El Salvador.
“Elon Musk apparently thinks it is easier to get billions of dollars in financing than an auto loan or a mortgage,” Pollitt added.
Spiro, though, pointed to Musk’s track record helping to start and run a list of companies that include digital payment pioneer PayPal and rocket ship maker SpaceX, in addition to Tesla. The automaker based in Austin, Texas, is now worth nearly $600bn, despite a steep decline in its stock price last year amid concerns that Musk’s purchase of Twitter would distract him from Tesla.
Recalling Musk’s roots as a South African immigrant who came to Silicon Valley to create revolutionary tech companies, Spiro described his client “as the kind of person who believes the impossible is possible”.
Porritt put a different twist on Musk’s mindset during his presentation. “To Elon Musk, if he believes it, or just thinks about it, it’s true.”
In his concluding remarks, Porritt told jurors their decision will boil down to how they answer one question: “Do the rules apply to everyone, or can Elon Musk do whatever he wants and not face the consequences?”