Musk 'not guilty' of fraud over tweets that sent Tesla shares soaring

Elon Musk and his security detail depart the company's local office in Washington, U.S - JONATHAN ERNST
Elon Musk and his security detail depart the company's local office in Washington, U.S - JONATHAN ERNST

Elon Musk has been found not guilty of fraud over tweets claiming he had “funding secured” for a private buyout of Tesla.

The Tesla chief executive had been accused of misleading shareholders, who sued him for billions of dollars in damages.

The jury in San Francisco reached a unanimous verdict after deliberating for two hours on Friday night.

Mr Musk hailed the victory on Twitter, writing: "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."

In 2018 Mr Musk tweeted that he was considering taking the company private at $420 per share, a premium of about 23pc to the prior day's close.

The case centred around two tweets, one in which he said he had “funding secured” and a second that added that “investor support is confirmed”.

The stock price soared after the tweets and then dropped nearly two weeks later when it became clear there would be no buyout.

Losses suffered by the investors, who were betting against the company, were as high as $12 billion, according to an economist hired by the shareholders.

Following Friday’s verdict, Tesla shares rose 1.6pc in after-hours trading.

Defending Mr Musk, lawyer Alex Spiro said the billionaire may have erred in his choice of wording but did not intend to deceive anyone.

He told the court: "He wrote two words 'funding secured' that were technically inaccurate.

“Whatever you think of him, this isn't a bad tweeter trial, it's a 'did they prove this man committed fraud?' trial."

Mr Spiro said the whole case was “built on bad word choice”.

During the three-week trial, Mr Musk told jurors he had believed the tweets were honest, saying he had lined up the necessary funding, including a verbal commitment from the Public Investment Fund, Saudi Arabia’s sovereign wealth fund.

He said he made the tweets to put small shareholders on the same footing as large investors who knew about the agreement, but admitted he lacked formal commitments from the Saudi fund and other potential supporters.

He said the Public Investment Fund later backtracked on its commitment.

Nicholas Porritt, a lawyer for the investors, said they were “disappointed” with the decision and were considering their next steps.

During closing arguments, he had argued that Mr Musk was not above the law and should be held liable for the tweets.

He said: "This case ultimately is about whether rules that apply to everyone else should also apply to Elon Musk.”