The following bad tweet did not, according to a jury in San Francisco on Friday, constitute fraud:
Tweet may have been deleted
Elon Musk's famous "funding secured" tweet was, however, thought to constitute fraud by the Securities and Exchange Commission back in 2018. That agency charged Musk with fraud, in the months after he tweeted it, saying he knew any such transaction was much less certain than he was letting on, that he "had not discussed specific deal terms, including price, with any potential financing partners."
In short, the SEC thought he was lying, sued him, and Musk settled that fraud lawsuit by stepping down as Tesla's chairman and paying $40 million.
In this latest trial, however, things went his way.
This suit, which also included Tesla and the Tesla board of directors as defendants, had been brought by Tesla Investors, arguing that Musk had injured them financially by giving the false impression that the car company’s stock price would soar to $420 per share in the course of going private.
The market seemingly reacted to the tweet, sending Tesla shares up 11 percent the day he tweeted it, but not to $420 — just $387.46. Then, Tesla stock promptly plunged to around $262 about a month later, around the time Musk went on the Joe Rogan Experience and smoked weed on camera. This drop no doubt resulted in great pain for shareholders, but that pain wasn't the result of fraud on Musk's part, according to the jury.
Over three weeks, Tesla and Musk argued that the "funding secured" tweet was actually true, and, for good measure, that the $420 a share thing wasn’t a weed joke, and just happened to be Musk’s best guess as to how the transaction would shake out.
An anonymous male juror stuck around after the trial and explained why the jury accepted Musk's version of events, telling the New York Times, "There was nothing there to give me an ‘aha’ moment," and that "Elon Musk is a guy who could sneeze and the stock market could react.
One interesting new detail from the latest proceedings is that we now know Musk did at least talk to one potential financing partner about financing the transaction: the Saudi sovereign wealth fund. Lawyers for the plaintiffs said the meeting minutes from Musk's interaction with that group showed they weren't fully on board, and still wanted to know more.
Also, Musk said in order to complete the transaction, he would have done something similar to what he did to buy Twitter: leverage shares of another company he owns a large stake in: in this case, SpaceX.
