Elon Musk found not guilty of fraud after tweets about Tesla

Three weeks of trial and relief for Elon Musk. A California jury found the multi-entrepreneur not guilty of fraud on Friday, February 3, after a complaint from investors who believed they had been harmed by tweets published in 2018 about Tesla.

Elon Musk surprised the markets on August 7, 2018 claiming on Twitter that he wanted to pull his car group from Wall Street at a price of $420 per share, 23% more than the previous day’s closing price, then ensuring that the financing was ” secure “. The stock surged, ending up 11% on the day, before declining in the following days.

Investors then bet on a fall in the action − “short-sellers” − believed that Elon Musk had violated stock market laws by presenting false information that boosted the action, and demanded compensation.

“Thank God the wisdom of the people prevailed! »

The judge in charge of the case, Edward Chen, initially concluded that the tweets were indeed misleading and that the entrepreneur had acted “irresponsibly”. Jurors had to decide whether the tweets artificially inflated the action and, if so, how much that may have affected the plaintiffs. They also then had to determine whether members of Tesla’s board of directors could be held responsible. By answering the first questions in the negative, the jurors quickly exonerated Elon Musk and Tesla.

“Thank God the wisdom of the people prevailed! » reacted the boss on Twitter. “I am deeply grateful to the jury for finding my innocence unanimously” in this case, he added.

For Dan Ives, of Wedbush, this decision “dispel one of the shadows that hangs over Tesla”. The electric vehicle maker did post record profits in 2022. But given the economic situation, some investors doubt the strength of demand for its high-priced cars in an increasingly competitive market.

Elon Musk must also manage a complicated situation at Twitter, which he has taken in turmoil since he became the owner at the end of October by laying off more than half of the employees or by making controversial decisions such as the return of suspended Internet users. by the previous leadership, including Donald Trump.

“A bad tweet” but not a fraud

On the stand at the start of the trial for three days in San Francisco, the multi-billionaire had assured that he had no ” Never “ sought to deceive investors. He really thought he had access to enough money following a meeting with the Saudi sovereign wealth fund, he said, pointing out that he could also have sold shares of his other flagship, SpaceX. However, Tesla quickly abandoned the idea of ​​delisting.

The American stock market policeman, the SEC, considering that the boss had not provided proof of his financing, forced him to cede the presidency of the board of directorsto pay a $20 million fine and later demanded that his tweets directly related to Tesla’s business be pre-approved by a competent legal practitioner.

Friday, during his final argument, the plaintiffs’ lawyer Nicholas Porritt had tried to argue that Elon Musk could not with impunity advance erroneous information that could have an influence on investors. Financial market rules are there to ensure that “everyone respects the same standards”including billionaires, had underlined the lawyer. “Do the rules apply to everyone or can Elon Musk do what he wants and not face the consequences? »

The boss’s lawyer, Alex Spiro, had for his part admitted that writing “secure financing” was “technically inaccurate”. But the funding “has never been the problem”he repeated several times. “Just because it’s a bad tweet doesn’t make it a fraud. »