Twitter Shareholder Trial Against Elon Musk Enters Final Stage

Class-Action Lawsuit Against Elon Musk Set to Conclude

A civil trial in San Francisco is nearing its conclusion, with closing arguments scheduled to begin on Tuesday. The trial centers on a class-action lawsuit filed by Twitter shareholders against Elon Musk, alleging that the billionaire engaged in deceptive behavior that misled investors as he attempted to back out of his $44 billion deal to acquire the social media platform in 2022.

Background

In October 2022, Musk completed his acquisition of Twitter, which he later renamed X, six months after agreeing to purchase the company for $44 billion, or $54.20 per share. The deal represented a small fraction of Musk's estimated net worth of $839 billion. The lawsuit was filed just before Musk took control of Twitter, alleging that he engaged in a pattern of deceptive behavior that misled investors.

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Key Issues

Much of the trial has focused on Musk's claims about the number of bots on Twitter. Musk testified that the company had a significantly higher number of fake and spam accounts than the 5% disclosed in regulatory filings. He cited this alleged misrepresentation as a reason to retreat from the purchase. However, Twitter's former CFO, Ned Segal, disputed this claim, stating that the number of bots was actually closer to 1%.

History of Bot Estimates

The problem of bots and fake accounts on Twitter was not new at the time Musk negotiated the deal. The company had previously paid $809.5 million in 2021 to settle claims that it was overstating its growth rate and monthly user figures. Twitter had also disclosed its bot estimates to the Securities and Exchange Commission for years, cautioning that its estimate might be too low.

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Trial Developments

On Monday, the two sides met to go over instructions to the jury. Judge Charles R. Breyer noted that many in the jury pool had negative views on Musk, but emphasized that a person who is "not universally liked" still deserves a fair trial. The trial is set to conclude with closing arguments on Tuesday.