Musk’s attorney Alex Spiro had argued Musk’s tweet did not constitute the entirety of what was disclosed about the matter, and while it was not necessarily accurate it did not constitute fraud.
Musk sat for testimony over three days last month in the case, arguing that his tweets were not comprehensive and that not everyone believes what he says when he posts. He said that his funding was secured because he owns a large stake in SpaceX, the rocket-building firm he leads, an argument plaintiffs disputed because it was not in his initial deposition.
Instead, they alleged, Musk’s tweets were sent after he met with the head of the Saudi Public Investment Fund, the country’s sovereign wealth fund, where any discussion about financing was far from definitive. Musk countered, however, that the Saudis did indeed express a commitment to take Tesla private and had the funding to back it up, though the parties never settled on a deal.
On Aug. 7, 2018, Musk posted a tweet reading: “Am considering taking Tesla private at $420. Funding secured.” Court documents also referenced a second Musk tweet from later that day, which read: “Investor support is confirmed. Only reason this is not certain is that it’s contingent on a shareholder vote.”
Musk’s claim unraveled in the ensuing days, however.
Musk said on Aug. 13, 2018, that he had been in discussions with the Saudi wealth fund about taking Tesla private in a deal that would value the company above $70 billion, but the post was not definitive. On Aug. 24, 2018, Musk reversed course, saying he planned to keep Tesla public.
The Securities and Exchange Commission sued Musk that September for allegedly lying to investors when he declared “Funding secured.” Musk and Tesla settled, and each paid $20 million fines, while Musk agreed to step aside as Tesla board chairman.
His replacement in that seat, Robyn Denholm, testified in the recent trial alongside others including Tesla executives and board members current and former.
Judge Edward M. Chen had already ruled the declaration of “Funding secured” untrue, leaving jurors to determine whether it was material to subsequent market moves, the extent to which it was relied on, and the liability of Musk and Tesla board members in potential damages.
In closing arguments, Musk attorney Spiro urged the jury not to compromise on their verdict — for example, by finding Musk liable but not the Tesla board. Rather, he pushed them to make a firm judgment on the materiality of the tweet. He argued that Musk’s tweet may have been “technically inaccurate” but that the case hinged on his “consideration” of taking Tesla private.
“Just because it’s a bad tweet, doesn’t mean it’s fraud,” he said.
The plaintiff’s attorneys argued that Musk should be subject to rules like anyone else, and that his behavior constituted fraud.
“This is about rules,” said attorney Nicholas Porritt. “This is about applying rules to billionaires like Elon Musk.”
He asked if the rule should apply, “or can Elon Musk do whatever he wants and not face the consequences?”
Jurors deliberated for about two hours before delivering their verdict.