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Elon Musk took the basal successful a shareholder proceedings connected Wednesday successful San Francisco, wherever he's accused of making mendacious and misleading statements that drove down Twitter's banal terms earlier helium bought the societal media level for $44 billion successful 2022.
The suit was filed successful October 2022 successful the U.S. District Court for the Northern District of California connected behalf of Twitter shareholders who sold the banal betwixt May 13 and Oct. 4, 2022, a fewer weeks before Musk's acquisition of Twitter was finalized. It claims Musk violated national securities laws by making false, nationalist statements that "were cautiously calculated to thrust down the terms of Twitter stock."
The billionaire Tesla CEO reached a woody to bargain Twitter and instrumentality it backstage successful April 2022. On May 13, however, helium declared his program "temporarily connected hold" and said helium needs to pinpoint the fig of spam and fake accounts connected the platform. Twitter's banal tumbled arsenic a result. A fewer days later, helium tweeted that the woody "cannot spell forward" and claimed that astir 20% of Twitter accounts were "fake," according to the lawsuit.
Court sketch shows Elon Musk connected the basal successful a shareholder proceedings Wednesday successful San Francisco.
Vicki Behringer
The plaintiff's lawyer, Aaron P. Arnzen, began with questioning Musk astir his tweets — oregon deficiency of tweets — astir his determination to bargain Twitter and his purchases of Twitter banal anterior to deciding to instrumentality the institution private.
Wearing a achromatic suit and tie, Musk said helium didn't deliberation it was "material" when, successful aboriginal 2022, he began amassing Twitter stock and did not tweet astir it oregon disclose to the Securities and Exchange Commission. He said he's bought banal successful "many companies" and did not station astir it.
Once helium did, Twitter's banal jumped 27% successful 1 day.
"That sounds high," Musk said.
Musk's May 13 tweet — "Twitter woody temporarily connected clasp pending details supporting calculation that spam/fake accounts bash so correspond little than 5% of users" — was "false due to the fact that the buyout was not, successful fact, 'temporarily connected hold,'" the suit says. That's due to the fact that Twitter did not hold to enactment the woody connected hold, and determination was thing successful the merger statement the 2 parties signed that allowed Musk to enactment it connected hold, according to the lawsuit.
Arnzen questioned Musk astir the tweet astatine length, asking if helium thought whether it would person a "material impact" connected Twitter's stock. Musk said helium made it explicit astatine the clip that helium was committed to the woody and that saying the woody was temporarily connected clasp was "like saying you're going to beryllium precocious for a meeting. (It doesn't) mean you are not going to beryllium astatine the meeting."
Elon Musk arrives astatine national tribunal connected March 4, 2026, successful San Francisco, California.
Josh Edelson / Getty Images
Twitter's banal fell astir 10% connected May 13.
Arnzen repeatedly asked Musk if helium stopped to deliberation astir however the tweet would impact the banal market. Musk answered, repeatedly, "I was simply speaking my mind."
In the pursuing weeks, Musk continued to effort to hold oregon get retired of the deal, which the suit claims helium did successful the signifier of false, disparaging statements astir Twitter's concern that drove the San Francisco company's banal down sharply.
In July 2022, Musk doubled down connected the bots contented and said helium would wantonness his connection to bargain Twitter aft the institution failed to supply capable accusation astir the fig of fake accounts. That's adjacent though the suit notes that Musk waived owed diligence for his "take it oregon permission it" connection to bargain Twitter. That means helium waived his close to look astatine the company's nonpublic finances.
Musk was repeatedly asked Thursday if, earlier waiving owed diligence, helium asked astir Twitter's methodology for determining the fig of fake oregon spam accounts, which the institution disclosed to beryllium astir 5%. Musk said helium did not, but that helium assumed if Twitter enactment thing successful an SEC filing, "it would beryllium accurate."
"It subsequently turned retired they misrepresented the fig of bots," helium said. "They lied."
The banal closed astatine $36.81 connected July 8, erstwhile Musk tweeted helium was abandoning the woody implicit the fake accounts issue. That's 32% beneath Musk's connection terms of $54.20 per share.
"To effort to renegotiate the terms oregon hold the merger, Musk made materially mendacious and misleading statements and omissions, and engaged successful a strategy to deceive the market, each successful usurpation of the law," the suit says.
The occupation of bots and fake accounts connected Twitter wasn't new. The institution had paid $809.5 cardinal successful 2021 to settee claims it was overstating its maturation complaint and monthly idiosyncratic figures. Twitter besides disclosed its bot estimates to the SEC for years, portion besides cautioning that its estimation mightiness beryllium excessively low.
Twitter sued Musk to unit him to implicit the deal, and Musk countersued. On Oct. 4, Musk offered to spell done with his archetypal connection to bargain Twitter for $44 billion, which Twitter accepted. The woody closed aboriginal that month. In the ensuing months, Musk slashed the company's workforce, gutted its trust and information team and rolled backmost contented moderation policies. In July 2023, helium renamed Twitter arsenic X.
This isn't the archetypal clip that Musk has been dragged into tribunal to support himself against allegations of duping investors with his societal media posts. Three years ago, Musk spent astir 8 hours testifying successful a San Francisco national proceedings astir his plans to bargain Tesla — the electrical automaker that helium inactive runs arsenic publically traded institution — for $420 per stock successful a projected 2018 woody that ne'er materialized. A nine-member assemblage absolved Musk of wrongdoing successful that case.
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