Jury rules for Elon Musk in ‘funding secured’ tweet lawsuit trial, clearing him of fraud

The following bad tweet did not constitute fraud, according to a jury in San Francisco on Friday:

The tweet may have been deleted
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However, Elon Musk’s famous “funding secured” tweet was deemed a fraud by the Securities and Exchange Commission in 2018. This agency accused Musk of fraud(Opens in a new window)in the months after tweeting it, he said he knew such a transaction was far less certain than he would admit, saying he had “not discussed specific terms and conditions, including price, with potential funding partners.”

In short, the SEC thought he was lying, sued him, and Musk made up his mind(Opens in a new window) this fraud lawsuit by resigning as chairman of Tesla and paying $40 million.

In this last process, however, things went his way.

That lawsuit, which also included Tesla and Tesla’s board of directors as defendants, was filed by Tesla Investors, alleging that Musk had harmed them financially by giving the false impression that the automaker’s stock price had fallen to US$420 in the process -dollars per share would go private.

The market apparently reacted to the tweet, sending Tesla shares up 11 percent the day he tweeted it, but not to $420 — just $387.46(Opens in a new window). Then, about a month later, Tesla stock promptly plummeted to around $262(Opens in a new window)around the time Musk attended the Joe Rogan Experience and smoked weed on camera(Opens in a new window). That drop undoubtedly caused a lot of pain for shareholders, but that pain wasn’t the result of fraud on Musk’s part, the jury found.

For three weeks, Tesla and Musk argued that the “funding secured” tweet was indeed true and that the $420-a-share thing wasn’t a weed hoax(Opens in a new window)and happened to be Musk’s best guess as to how the transaction would play out.

An anonymous male juror stayed around after the trial and told The New York Times why the jury accepted Musk’s version of events(Opens in a new window)“There wasn’t anything that gave me an ‘aha’ moment” and that “Elon Musk is a guy who could sneeze and the stock market could react.

An interesting new detail from the recent proceedings is that we now know that Musk has been in talks with at least one potential funding partner about funding the transaction: the Saudi sovereign wealth fund(Opens in a new window). The plaintiffs’ attorneys said meeting transcripts of Musk’s interaction with that group showed they weren’t fully on board and still wanted to know more(Opens in a new window).

Additionally, Musk said that to complete the transaction, he did something similar to what he did when he bought Twitter: using shares in another company in which he has a large stake: in this case, SpaceX(Opens in a new window).