US judge tosses out Musk’s bid to void Twitter fraud verdict

A federal judge in San Francisco has upheld a jury's finding that Elon Musk committed fraud against Twitter investors by making misleading statements about the platform's bot accounts to manipulate its stock price. The ruling came after Musk sought to void the March verdict and prevent the investor class from proceeding with their case.

Judge Charles Breyer determined that Musk's May 2022 tweets, in which he questioned whether Twitter was overrun by fake accounts and suggested the acquisition could not proceed until bot levels were verified below 5 percent, contained substantial false statements. The first tweet caused Twitter's share price to fall 18 percent over two trading days, resulting in investor losses when they sold at depressed prices. The judge found evidence that Musk used bot concerns as a pretext to exit or renegotiate the existing deal.

While Breyer agreed with Musk that a second May tweet did not trigger market losses, he rejected other defenses, including Musk's claim that jurors were mocking him by highlighting the figure "$4.20" on the verdict form. The judge stated that even if a party experiences regret about a transaction, such feelings do not justify deceiving the investing public.

Mark Molumphy, representing the investors, characterized the ruling as a significant victory for public market participants, noting that jurors had rejected Musk's attempt to manipulate the system. Musk's legal team did not immediately respond to requests for comment. The case represents one of several legal challenges facing Musk related to his acquisition of Twitter, which he subsequently renamed X and integrated into his SpaceX operations.