Elon Musk, who is a co-founder of Tesla who tweeted that he had “financing secured” to transfer the electric car manufacturer back into private ownership, has been exonerated of any misconduct in connection with the remark.
Shareholders claimed that he had misled them with his posts in August 2018 and that; as a result, they had suffered financial losses in the billions of dollars.
The intended takeover of the company for $72 billion (£60 billion) was never completed.
In the event that Musk was judged to be at fault, he faced the possibility of having to pay out billions of dollars in damages.
On Friday afternoon, it took the nine members of the jury a little less than two hours to come to a decision regarding the class-action lawsuit.
Mr Musk, who had argued that he could not receive a fair trial in San Francisco, hailed the verdict, even though he had wanted the trial to be transferred to Texas, where Tesla is headquartered.
Using Twitter, a social media company that he purchased for $44 billion in October of last year, he posted the following message: “Thank heavens, the wisdom of the people has won!
“I am quite grateful that the jury came to the conclusion that there was no evidence to suggest that the defendant was guilty in the Tesla 420 take-private case.”
The tweet that Elon Musk posted on August 7, 2018, which read, “Am considering taking Tesla private at $420,” is at the heart of the case. “Funding has been secured.”
Additionally, the plaintiffs contended that Mr Musk had misled when he tweeted later that day that “investor support is confirmed.“
After the tweets, there was a sharp increase in the price of the shares, but this gain was quickly erased as it became apparent that the transaction would not be completed.
As a result of many shareholders basing choices about purchasing and selling their shares on the tweet, the investor losses have been estimated to be as high as $12 billion, according to an economist that was engaged by the shareholders.
In response to Mr Musk’s tweets, the United States Securities and Exchange Commission (SEC) filed a lawsuit against him, accusing him of deceiving investors. Mr Musk reached a settlement with the company for $20 million and agreed to resign as chairman of the Tesla board.
Mr Musk, who is also the CEO of SpaceX and Twitter, had maintained during the course of the three-week trial that he believed he had a verbal commitment from the royal wealth fund of Saudi Arabia for sale.
“Just because I tweet something does not mean others believe it or will act accordingly,” the world’s second-richest man testified during his nearly nine hours on the witness stand.
Shareholders contended that the phrase “financing secured” implied something more substantial than a verbal agreement.
Simply a poor tweet?
Despite the fact that Tesla’s share price skyrocketed after the tweet was sent, Mr Musk questioned whether or not his tweets had any effect at all on Tesla’s share price.
“At one point I tweeted that, in my opinion, the stock price was too high… and it went higher, which is counterintuitive,” he said, arguing that the effect his tweets have on the stock price can be unpredictable. “At one point I tweeted that I thought that, in my opinion, the stock price was too high… and it went higher,” he said.
Mr Musk has stated that he ultimately decided to abandon his proposal to take Tesla private because his interactions with smaller investors led him to believe that those investors would prefer that the company continue to be listed publicly.
Although he was absent from the courtroom when the verdict was announced, he was present for the closing arguments that took place earlier on Friday. During those arguments, the opposing legal teams drew competing images of him.
A lawyer representing Tesla stockholders named Nicholas Porritt made the following statement: “Our civilization is based on norms. Rules are necessary if we are to avoid descending into chaos. Rules ought to be applied to Elon Musk the same way they are to everyone else.
The legal representative for Mr Musk, Alex Spiro, has stated that “Just because it’s a stupid tweet doesn’t make it a fraud.”
Following the announcement of the conviction, Mr Porritt was quoted as saying, “We are upset with the verdict and are evaluating next moves.”
During the majority of his evidence, Mr Musk maintained a level of composure while displaying signs of annoyance at times due to the questions being asked.
There were also some humorous moments throughout. Following an incident in which a lawyer representing shareholders inadvertently referred to Elon Musk as “Mr. Tweet,” Elon Musk instantly altered his identity on Twitter to reflect the same moniker.
James Murdoch, who is the son of Rupert Murdoch, was one of the other Tesla directors that testified as well. According to their testimony, Mr Musk did not require the oversight of the Tesla board for his buyout tweets.
A securities fraud attorney named Reed Kathrein said the not guilty finding was “a disgrace to investors and the securities laws” and referred to the tweet about taking Tesla private as “as concrete a statement of taking a corporation private as there can be.”