Musk Takes The Stand In The Trial Where He's Accused Of Deflating Twitter Stock Ahead Of Purchase

Elon Musk took nan guidelines 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 value earlier he bought nan societal media level for $44 cardinal successful 2022.

The suit was revenge successful October 2022 successful nan U.S. District Court for nan Northern District of California connected behalf of Twitter shareholders who sold nan banal betwixt May 13 and Oct. 4, 2022, a fewer weeks earlier 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 nan value of Twitter stock.”

The billionaire Tesla CEO reached a woody to bargain Twitter and return it backstage successful April 2022. On May 13, however, he declared his scheme “temporarily connected hold” and said he needs to pinpoint nan number of spam and clone accounts connected nan platform. Twitter’s banal tumbled arsenic a result. A fewer days later, he tweeted that nan woody “cannot spell forward” and claimed that almost 20% of Twitter accounts were “fake,” according to nan lawsuit.

The plaintiff’s lawyer, Aaron P. Arnzen, began pinch questioning Musk astir his tweets — aliases deficiency of tweets — astir his determination to bargain Twitter and his purchases of Twitter banal anterior to deciding to return nan institution private.

Wearing a achromatic suit and tie, Musk said he didn’t deliberation it was “material” when, successful early 2022, he began amassing Twitter banal and did not tweet astir it aliases disclose to nan Securities and Exchange Commission. He said he’s bought banal successful “many companies” and did not station astir it.

Once he 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 specifications supporting calculation that spam/fake accounts do so correspond little than 5% of users” — was “false because nan buyout was not, successful fact, ‘temporarily connected hold,’” nan suit says. That’s because Twitter did not work together to put nan woody connected hold, and location was thing successful nan merger statement nan 2 parties signed that allowed Musk to put it connected hold, according to nan lawsuit.

Arnzen questioned Musk astir nan tweet astatine length, asking if he thought whether it would person a “material impact” connected Twitter’s stock. Musk said he made it definitive astatine nan clip that he was committed to nan woody and that saying nan 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 nan meeting.”

Twitter’s banal fell astir 10% connected May 13.

Arnzen many times asked Musk if he stopped to deliberation astir really nan tweet would impact nan banal market. Musk answered, repeatedly, “I was simply speaking my mind.”

In nan pursuing weeks, Musk continued to effort to hold aliases get retired of nan deal, which nan suit claims he did successful nan shape of false, disparaging statements astir Twitter’s business that drove nan San Francisco company’s banal down sharply.

In July 2022, Musk doubled down connected nan bots rumor and said he would wantonness his connection to bargain Twitter aft nan institution grounded to supply capable accusation astir nan number of clone accounts. That’s moreover though nan suit notes that Musk waived owed diligence for his “take it aliases time off it” connection to bargain Twitter. That intends he waived his correct to look astatine nan company’s nonpublic finances.

Musk was many times asked Thursday if, earlier waiving owed diligence, he asked astir Twitter’s methodology for determining nan number of clone aliases spam accounts, which nan institution disclosed to beryllium astir 5%. Musk said he did not, but that he assumed if Twitter put thing successful an SEC filing, “it would beryllium accurate.”

“It subsequently turned retired they misrepresented nan number of bots,” he said. “They lied.”

The banal closed astatine $36.81 connected July 8, erstwhile Musk tweeted he was abandoning nan woody complete nan clone accounts issue. That’s 32% beneath Musk’s connection value of $54.20 per share.

“To effort to renegotiate nan value aliases hold nan merger, Musk made materially mendacious and misleading statements and omissions, and engaged successful a strategy to deceive nan market, each successful usurpation of nan law,” nan suit says.

The problem of bots and clone 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 personification figures. Twitter besides disclosed its bot estimates to nan Securities and Exchange Commission for years, while besides cautioning that its estimate mightiness beryllium excessively low.

Twitter sued Musk to unit him to complete nan deal, and Musk countersued. On Oct. 4, Musk offered to spell done pinch his original connection to bargain Twitter for $44 billion, which Twitter accepted. The woody closed later that month. In nan ensuing months, Musk slashed nan company’s workforce, gutted its spot and information squad and rolled backmost contented moderation policies. In July 2023, he renamed Twitter arsenic X.

This isn’t nan first clip that Musk has been dragged into tribunal to take sides himself against allegations of duping investors pinch 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 — nan electrical automaker that he still runs arsenic a 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.

Ortutay and Liedtke constitute for nan Associated Press.