Elon Musk Found Liable for Misleading Investors Over Twitter Bot Claims

A Delaware court has ruled that Elon Musk intentionally misled investors about the number of bot accounts on Twitter (now X) before his $44 billion acquisition of the company in 2022. The jury found Musk liable for two counts of securities fraud, rejecting two other claims brought by former Twitter shareholders.

Jury Finds Musk Intentionally Misled Investors

The unanimous jury decision concluded that Musk’s statements regarding the prevalence of bot accounts were deliberately designed to lower Twitter’s valuation, allowing him to secure a more favorable deal during the takeover. The trial, which lasted three weeks, focused on whether Musk’s public comments about bots were honest opinions or calculated maneuvers to drive down the stock price.

Stock Price Impact and Damages

The jury assessed the impact of Musk’s statements on Twitter’s share price over a five-month period, noting a significant decline following his comments. Damages in the case, estimated by plaintiffs’ attorneys to potentially reach $2.6 billion, will be determined as affected shareholders submit their claims.

Legal Experts Weigh In

Monte Mann, a business litigation partner at Armstrong Teasdale, explained that the verdict highlights a growing trend of juries scrutinizing public statements made by executives, particularly when those statements appear to be linked to dealmaking strategies. “What likely resonated with the jury was the pattern—statements, timing, and market reaction all lining up in a way that suggested this wasn’t just commentary,” Mann told Business Insider. https://www.businessinsider.com/elon-musk-twitter-bots-jury-finds-him-liable-2024-2

Background: Musk’s Claims About Bots

Prior to acquiring Twitter, Elon Musk repeatedly expressed concerns about the platform’s bot problem, claiming a substantial portion of accounts were automated. In September 2022, the RAND Corporation published an analysis suggesting Musk may have had a point about the prevalence of bots on Twitter, noting the difficulty in accurately estimating spam accounts. https://www.rand.org/pubs/commentary/2022/09/elon-musk-may-have-a-point-about-bots-on-twitter.html

X’s Current Bot Situation

Despite Musk’s initial pledge to eliminate bots from the platform, reports indicate that bot activity on X remains a concern, particularly during global elections. Rest of World reported in August 2024 that influence campaigns were running rampant on X, with the platform failing to remove accounts linked to coordinated inauthentic behavior even when notified by researchers. https://restofworld.org/2024/twitter-x-bots-elon-musk-elections/

Appeal Expected

Lawyers representing Musk are expected to appeal the jury’s decision. X, Musk, and their legal representatives did not immediately respond to requests for comment.