By Abhirup Roy and Jonathan Stempel
SAN FRANCISCO, March 17 (Reuters) – A lawyer for former Twitter shareholders suing Elon Musk urged a federal jury on Tuesday to hold the world’s richest person liable for driving down Twitter’s stock price in 2022 by “attempts to withdraw from or renegotiate his $44 billion purchase of the social media platform.”
In his closing argument in federal court in San Francisco, attorney Mark Molumphy told jurors that Musk defrauded shareholders by publicly questioning on three occasions whether Twitter was overrun with fake accounts and spam, and perhaps had four or five times more than the 5% he disclosed.
Molumphy also said Musk was unfazed when he signed the April 2022 merger deal despite knowing by then that Twitter underestimated the number of fake accounts, known as bots.
“It destroyed the company. It destroyed the executives. And it destroyed the stock,” Molumphy said.
Musk’s lawyer, Michael Lifrak, responded in his closing statement that the billionaire had a “real” concern about bots and was focused on determining how serious the problem was, not how to save money.
“Two tweets and a podcast do not equal securities fraud,” Lifrak told the jury. The only thing the plaintiffs have argued, he said, is that if Musk had remained silent, the stock would not have fallen, but they have not shown any evidence of fraud.
“The only thing the plaintiffs have told him is that if Mr. Musk had not said anything, the shares would not have gone down. But they did not demonstrate fraud.”
The jury began its deliberations and was dismissed for the day without reaching a verdict. They are expected to resume deliberations on Wednesday, a judicial official said.
The jury will consider whether Musk’s three statements about bots were fraudulent and whether he planned to defraud Twitter shareholders by driving down the stock price. If the answer is no, Musk wins. If the answer is yes, jurors will consider possible damages.
Musk began questioning his Twitter purchase shortly after agreeing to it, posting on the social media platform that the transaction was “temporarily on hold” and that the percentage of bots could be 20% or more.
In a disputed statement, he tweeted on May 17, 2022 that the purchase “cannot continue” until Twitter’s CEO proves that the percentage of bots was less than 5%.
Twitter subsequently filed a lawsuit to force Musk to complete the acquisition, which he did in October 2022. Musk subsequently changed Twitter’s name to X. The platform is now part of his rocket and satellite company SpaceX.