Tesla CEO Elon Musk has been cleared of fraud charges in the 'funding secured' trial in New York. The jury found Musk "not liable" for losses incurred by investors who accused him of fraud based on his tweets in August 2018 about taking Tesla private, adding "funding secured". The jury deliberated for about an hour before reaching their verdict.
For weeks, the jury heard a litany of witnesses including Musk himself, recounting the events leading up to and following the August 7th, 2018 tweet. Investment banking witnesses previously testified that, days after the tweet, they were still trying to determine how the deal would be structured. Musk had testified that, even without external financing, he believed he could take Tesla private with his own wealth, including his stake in his private space company SpaceX, as the foundation of the deal.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
However, plaintiffs' attorney Nicholas Porritt argued that Musk's tweet was "a lie" and that Musk and Tesla should be held accountable for tweets that were already ruled to be false. Porritt argued that billionaires shouldn't get to operate under a different set of rules and that Tesla should also be held liable because of their decision to allow Musk and his Twitter feed to serve as the primary source of corporate communication.
On the other hand, Musk's attorney Alex Spiro's argument rested on convincing the jury to believe that Musk tweeted "funding secured" because he sincerely believed he would have "ample funding" to take Tesla private. Spiro acknowledged that the tweet was "technically inaccurate", but not fraud. He claimed that "Just because it's a bad tweet doesn't make it fraud."
In 2018, Elon Musk agreed to a $40 million settlement with the Securities and Exchange Commission over the tweet, which required him to relinquish his position as chair of the company, but not admit to any wrongdoing. However, he has since argued that he was coerced into the settlement. Despite the lawsuit, the jury's decision has determined that Musk and Tesla are not liable for possibly billions of dollars in damages, allowing Musk to walk away unscathed.
