Elon Musk is set to testify in a shareholder trial in San Francisco regarding allegations of false statements that led to a drop in Twitter’s stock price before his $44 billion acquisition in 2022. The lawsuit, filed in October 2022, claims Musk violated federal securities laws by making misleading statements intended to lower Twitter’s stock value. In May 2022, he announced the acquisition was “on hold” while questioning the number of spam accounts on the platform, resulting in a significant stock decline.
The complaint argues Musk’s public comments were untrue, as the deal was not officially paused. Amid ongoing negotiations, Musk made remarks about Twitter’s business that further impacted its stock, leading to substantial losses for shareholders. In July 2022, Musk announced he was abandoning the deal, citing a lack of information on fake accounts, despite having waived his right to due diligence earlier.
The stock fell to $36.81 by July 8, 32% below his offer of $54.20 per share. The lawsuit contends Musk employed a scheme to mislead the market, violating the law. Twitter has a history of bot-related transparency issues and previously settled similar allegations. After legal back-and-forths, Musk completed the acquisition in October 2022 but subsequently made significant changes to the company’s operations.
This isn’t Musk’s first legal challenge regarding misleading investor statements; he faced similar scrutiny in 2018 over tweets about Tesla, from which he was ultimately exonerated.
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