Elon Musk to testify in Twitter shareholder lawsuit over stock price manipulation claims

Elon Musk is set to appear in San Francisco shareholder trial on Wednesday, March 4, in a shareholder trial where he is accused of making false and misleading statements.

It is claimed that his controversial tweets deliberately drove down Twitter’s stock price before he acquired the platform for $44 billion in 2022.

The lawsuit was filed in October 2022 in the U.S. District Court for the Northern District of California, could have serious implications for Musk’s legal standing and set precedents around executive conduct during high-profile corporate takeovers.

The shareholders accused him of violating federal security laws with his statements, “carefully calculated to drive down the price of Twitter stock.”

Key claims include:

• May 13, 2022: Musk announced that the Twitter deal was “temporarily on hold” pending information on spam accounts, which caused Twitter’s stock to fall significantly. However, this was false because Twitter had never agreed to putting the deal on hold, and there was nothing in the merger agreement that allowed them to do so.
• Subsequent weeks: Musk continued defaming Twitter’s business, making remarks like 20% of the accounts are fake. Stakeholders claim that such comments were made to renegotiate or escape the deal.
• July 2022: He tweeted that he will back out of the deal because of the bot issue. The stock closed on July 8th at $36.81, which is 32% below the $54.20 per share offer that Musk made.

The lawsuit notes Musk waived due diligence for his “take it or leave it” offer, which means that he forfeited his right to analyse Twitter’s non-public finances before attempting to back out.

Musk will now face questions about his public statements and tweets during the acquisition period.