ALBAWABA — A jury on Friday found Elon Musk, Tesla co-founder and chief executive officer, not guilty of defrauding investors for tweets he posted on Aug. 7, 2018, saying he had secured funding to take the company private at $420 per share, a premium of about 23 percent to the prior day's close.
Tesla's stock price surged and then fell back again as it became clear the proposed buyout would not happen, costing investors billions of dollars overall, pushing investors to argue that Musk and the Tesla board should be made to pay damages.
Shareholders sued, arguing that Musk had lied and made things worse when he tweeted later in the same day that "investor support is confirmed," saying he had acted recklessly and fraudulently in an effort to squeeze investors who had bet against the company.
The United States Securities and Exchange Commission also sued Musk over his tweets, only settling the case after he stepped down as chairman.
During the three-week trial in San Francisco, Musk told jurors that he believed the tweets were truthful and that it was no joke that he had lined up the necessary financing, including a verbal commitment from Saudi Arabia's Public Investment Fund, but that PIF had later reneged on its word.
Musk also testified that he believed he could have sold enough shares of his rocket company SpaceX to fund a buyout, and "felt funding was secured" even with SpaceX stock alone.
The billionaire did not intend to deceive anyone with the tweets and had the connections along with the wealth to take Tesla private, contended Musk's lawyer, Alex Spiro.
Jurors barely deliberated for two hours before returning to the courtroom, agreeing unanimously that neither Musk, nor the Tesla board were liable for misleading investors, as no fraud had taken place.
"Thank goodness, the wisdom of the people has prevailed!" tweeted Musk on Saturday. "I am deeply appreciative of the jury's unanimous finding of innocence in the Tesla 420 take-private case."
"The jury got it right," Spiro told reporters after the verdict, which could have forced Musk to sell Tesla stocks and other assets to fork out billions had he been found liable.
"We are disappointed with the verdict and are considering next steps," Nicholas Porritt, a lawyer for the investors, said in a statement.
Tesla shares rose 1.44 percent to 189.98 in after-hours trading following the verdict.
