Elon Musk leaves the Phillip Burton Federal Building and United States Court House in San Francisco. Photo / AP
Elon Musk leaves the Phillip Burton Federal Building and United States Court House in San Francisco. Photo / AP
A jury on Friday (Saturday NZ time) decided Elon Musk didn’t deceive investors with his 2018 tweets about electric automaker Tesla in a proposed deal that quickly unravelled and raised questions about whether the billionaire had misled investors.
The verdict by the nine jurors was reached after less than two hours of deliberation following a three-week trial. It represents a major vindication for Musk, who spent about eight hours on the witness stand defending his motives for the August 2018 tweets at the center of the trial.
Musk, 51, wasn’t on hand for the brief reading of the verdict, after making a surprise appearance earlier that day for closing arguments that drew starkly different portraits of him.
Alex Spiro, Musk’s attorney, declined to comment as he walked out of the courtroom following the verdicts.
The trial pitted Tesla investors represented in a class-action lawsuit against Musk, who is CEO of both the electric automaker and the Twitter service he bought for $44 billion (NZ$70b) a few months ago.
Shortly before boarding his private jet on August 7, 2018, Musk tweeted that he had the financing to take Tesla private, even though it turned out he hadn’t confirmed an iron-clad commitment for a deal that would have cost US$20 billion to $70 billion to pull off.
The latest stock setback and whistleblower issue for Twitter came amid a drawn-out legal and PR battle with Elon Musk.
Musk’s integrity was at stake at the trial, as well part of a fortune that has established him 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, which had already been deemed falsehoods by the judge presiding over the trial.
Earlier on Friday (Saturday NZ), Musk sat stoically in court during the trial’s closing arguments while he was both vilified as a rich narcissist whose reckless behaviour risks “anarchy” and hailed 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 centred on two tweets Musk posted on August 7, 2018 about a Tesla buyout that never happened.
In the first tweet, 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 trial.
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 attorney, 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 he believed he had lined up the funds from Saudi Arabia’s Public Investment Fund 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 have been on its way to ending its run as a publicly held company.
Am considering taking Tesla private at $420. Funding secured.
“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 after a 45-minute meeting at a Tesla factory on July 31, 2018 with Yasir al-Rumayyan, governor of Saudi Arabia’s wealth fund, given there was no written documentation.
A text message that al-Rumayyan sent later in August that is part of the trial evidence also indicated that the Saudi fund was only interested in learning more about Musk’s proposal to take Tesla private at a time when the company was valued at about $60 billion.
“Apparently, a $60 billion financing commitment was obtained and no one wrote down a single word,” Porritt said, while asserting that amount was larger than the combined economic output of Nicaragua, Honduras and El Salvador.
Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote. https://t.co/bIH4Td5fED
Spiro, though, pointed to Musk’s track record of helping to start and run a list of companies, including digital payment pioneer PayPal and rocket ship maker SpaceX, in addition to Tesla. The automaker, based in Austin, Texas, is now worth nearly $600b, 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 boiled down to their answer to one question: “Do the rules apply to everyone, or can Elon Musk do whatever he wants and not face the consequences?” - AP
