$44 Billion Acquisition Deal Derailed? Musk Ruled to Have Misled Investors, Could Face $2.6 Billion in Damages

California jury finds Elon Musk made misleading statements during Twitter acquisition, causing nearly 10% stock price fluctuation, with potential damages up to $2.6 billion.

A California jury recently ruled on Elon Musk’s acquisition of Twitter (now X), finding that he made misleading statements during the process. The case, which took place in 2022 and involved a $44 billion merger, centered on Musk questioning the number of bot accounts on Twitter via social media. The jury determined that his specific statements lacked factual basis, leading to nearly a 10% fluctuation in Twitter’s stock price and harming some shareholders’ interests. According to the plaintiff’s lawyers, the potential damages could reach as high as $2.6 billion.

Jury Verdict: Musk Intentionally Misled Twitter Shareholders

The core of this class-action lawsuit is Musk’s announcement in May 2022 that the acquisition was “temporarily on hold.” The jury unanimously found that his public statements on May 13 and 17 contained significant falsehoods or misrepresentations. These statements created market uncertainty, causing Twitter’s stock to drop nearly 10 in a single trading day. Many investors sold their shares below the original $54.20 per share offer. The plaintiff’s lawyers estimate that, based on expert assessments of how much the news affected the stock price, the maximum damages could be up to $2.6 billion, with proceedings expected to start within months.

Disclosure of Information and Securities Regulations

This case highlights the strict regulations around information disclosure during mergers and acquisitions (M&A). In financial markets, statements by influential individuals can directly impact asset pricing. Although the jury ultimately found that Musk did not orchestrate a “scheme to defraud,” his public questioning of Twitter’s fake accounts was deemed misleading and caused tangible harm to shareholders trading during that period. This serves as a reminder that during major transactions, any statements not officially released through regulatory channels like the U.S. Securities and Exchange Commission (SEC) carry a high risk of securities violations.

Damages Could Reach $2.6 Billion, Musk Still Has the Right to Appeal

After the verdict, investors’ lawyers stated that damages could amount to $2.6 billion. However, even such a large sum would not significantly impact Musk’s net worth. According to the Bloomberg Billionaires Index, as of Friday, Musk’s net worth was $661.1 billion.

It is important to note that the jury’s decision is a verdict. After the verdict, the judge must issue a formal judgment to confirm the damages and outline enforcement procedures. Musk’s legal team has already indicated they see this ruling as “rough terrain” and plan to appeal in hopes of overturning it.

• This article is reprinted with permission from: 《Chain News》
• Original title: 《Elon Musk Misleads Investors During Twitter Acquisition, Damages Could Reach $2.6 Billion》
• Original author: Florence