Closing arguments set to begin in Twitter shareholder trial accusing Musk of driving down stock
SAN FRANCISCO — Closing arguments begin Tuesday at a hearing where Elon Musk and the world’s richest man face off against Twitter shareholders who say he engaged in deceptive behavior that misled investors as he tried to back out of a $44 billion deal to buy the social media platform in 2022.
The civil lawsuit in San Francisco centers on a class-action lawsuit filed six months after Musk agreed to buy the embattled company for $44 billion, or $54.20 per share, in October 2022, just before he took control of Twitter, which he later renamed X. The price represents a small fraction of the Tesla CEO’s fortune, currently estimated at $839 billion.
Much of the hearing focused on Musk’s claims about the number of bots on Twitter. Musk said Twitter has many more fake and spam accounts than the 5% it has disclosed in regulatory filings, as it has long claimed. He used Twitter’s misrepresentation of the number of fake accounts on its services as reason to back out of the acquisition.
After Musk tried to back out, Twitter went to court in Delaware to force him to honor his original agreement. Just before this case went to trial, Musk reversed course once again and agreed to pay the amount he had originally promised.
The problem of bots and fake accounts on Twitter was not new when Musk was negotiating the deal. The company paid $809.5 million in 2021 to cover allegations that it exaggerated its growth rate and monthly user figures. While Twitter has also been disclosing bot predictions to the Securities and Exchange Commission for years, it also warned that its prediction might be too low.
However, Musk claimed that this figure was much higher, at least 20%, according to some analysts. Musk said saying the number of bots was at least that high was like “saying the grass is green or the sky is blue.”
Ned Segal, Twitter’s former CFO, disputed that claim and said on the witness stand that the figure was actually closer to 1%.
Asked whether Twitter had filed a false filing with the SEC misreporting spam numbers, Segal said it had not. However, he noted that the company reorganized its finances after noticing an error in its daily user calculation. Twitter said in 2017 that it had mistakenly overestimated its monthly user count because it included users of a third-party app it shouldn’t have.
On Monday, the two sides met to present instructions to the jury. Judge Charles R. Breyer noted that many people in the jury pool had negative views of Musk. But he added that a “universally disliked” person still deserves a fair trial and should not be treated in a discriminatory or prejudicial manner.
This article was generated from an automated news agency feed without modifications to the text.
