SAN FRANCISCO (CN) — After three weeks of testimony in the Tesla securities trial, jurors on Friday found Tesla CEO Elon Musk and Tesla itself not liable on all claims of fraud and attempts to deceive investors in their efforts to take the electric vehicle company private.
Musk faced trial in the lawsuit filed by Tesla shareholders who said they were misled by an Aug. 7, 2018, tweet in which he said he secured financing for a Tesla buyout. That buyout never came to fruition, however, and stockholders cried foul.
“Am considering taking Tesla private at $420. Funding secured,” the South African-born multibillionaire tweeted at the time. Tesla stock jumped in value and then sank when it when it became clear nothing of the sort was going to happen. The tweet also cost Musk $40 million when the U.S. Securities and Exchange Commission fined him following an investigation.
The nine jurors heard more than two hours of closing arguments before beginning deliberations, a process that lasted only a couple of hours.
While a victory for the defense, the day started a little less optimistically. Friday’s session began with a tongue-lashing from U.S. District Judge Edward Chen, excoriating the defense for submitting evidence outside his established time limits and and continued with technical problems as the court’s tech guy moved about the room trying to fix the issue. Nearly 45 minutes after the scheduled start time of 8:30 a.m., closing arguments finally got under way.
Throughout the trial, jurors heard hours of testimony not only from Musk himself, who sat in the witness box for three days, but from his closest colleagues at Tesla,Tesla board members, paid experts and the plaintiffs like Glen Littleton — the lead plaintiff — who testified to losing millions of dollars as a result of misleading tweets posted by Musk himself.
Jurors viewed dozens of charts tracking the growth and losses in Tesla stock values, numerous emails and texts between Musk and individuals such as Yusin al-Rumayyan, director of the Saudi Arabian Private Investment Fund, which had been poised to bankroll the take-private scheme but dropped out when Musk failed to produce financial and other statements for which they had asked.
In his closing argument, plaintiffs' attorney Nicholas Pirrott questioned why even 10 days after Musk had spoken with al-Rumayyan, Musk had not spoken with him again to clinch the deal.
“How credible is it you get a commitment of $60 billion and then not follow up, not even a phone call,” Pirrott asked.
For the past three weeks, Pirrott had hit hard on the idea that Musk’s statement “funding secured” in his tweet had misled numerous investors, causing them to lose millions when the stocks tanked and the deal fell through.
In addition to working with other potential investors, Musk said he would have reluctantly sold SpaceX shares to cover the costs, an act he said that would have saddened him but which he saw as potentially necessary. Pirrott noted repeatedly that option had not been brought up in the numerous exchanges about the deal, seeming to question whether that had been an option at all.
The defense, however, argued that “funding secured” had never really been the issue. While lead defense attorney Alex Spiro acknowledged Musk’s tweets were inaccurate — Chen had instructed jurors to assume the tweets were inaccurate at the beginning of the trial — he noted that investors didn’t bat an eye.
“This whole case is built on bad word choices,” Spiro said. In the end, the jury agreed and sided with Musk and Tesla.
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