A federal jury in San Francisco entered deliberations on Tuesday to determine whether billionaire entrepreneur Elon Musk engaged in securities fraud through his public statements regarding the $44 billion acquisition of Twitter in 2022. The eight-member panel heard closing arguments but adjourned without reaching a verdict and is scheduled to resume its work on Wednesday.
The Core Allegations
Plaintiffs, representing a class of former Twitter shareholders, allege that Musk deliberately made misleading statements to drive down the social media platform's stock price, thereby securing more favorable acquisition terms or an opportunity to abandon the deal. The lawsuit centers on Musk's May 13, 2022 tweet declaring the deal was "temporarily on hold" pending verification of Twitter's spam account metrics, alongside subsequent public comments.
The shareholders contend that Musk was already aware, prior to signing the April 2022 merger agreement, that Twitter's disclosures about fake or spam accounts might be inaccurate. They argue he weaponized the bot issue as leverage to renegotiate the $54.20-per-share offer. The class action specifically encompasses investors who sold Twitter shares between May 13 and October 4, 2022.
High-Stakes Legal Battle
The financial stakes are monumental, with potential damages reaching into the billions of dollars. The jury's task is to decide if Musk's market-moving communications crossed from aggressive deal negotiation into the realm of intentional securities fraud. According to court instructions, jurors must evaluate not only the initial "on hold" tweet but also a later post and remarks Musk made on the "All-In" podcast.
A critical element of the case requires the jury to determine what portion of Twitter's stock decline leading up to October 3, 2022, was artificially induced by Musk's statements. Plaintiffs' attorney Mark Molumphy asserted in closing arguments that Musk "trashed the company. Trashed the executives. And tanked the stock," characterizing the posts as "intentional" and "deliberate."
The Defense's Counterargument
Musk's legal team, led by attorney Michael Lifrak, vigorously denies any fraudulent intent. The defense maintains Musk was acting in good faith to investigate genuine concerns about the prevalence of fake accounts on the platform, which he estimated constituted "at least 20%" of users—a figure starkly contrasted by Twitter's own disclosure of roughly 1%.
"Two tweets and a podcast does not equal securities fraud," Lifrak told jurors, insisting the plaintiffs presented "zero evidence" of a scheme to depress the stock price. The defense highlighted that Musk ultimately completed the acquisition in October 2022 at the originally agreed price, after Twitter successfully sued him in Delaware Chancery Court to enforce the merger agreement.
Broader Context and Precedents
The trial, which began on March 2, 2026, is one of several legal entanglements facing Musk. Reuters reported that he is concurrently negotiating with the U.S. Securities and Exchange Commission over a separate lawsuit concerning the disclosure of his early 2022 Twitter stake accumulation. Notably, Musk previously prevailed in a related San Francisco courtroom, defeating shareholder claims tied to his 2018 Tesla "funding secured" tweet.
Historical context reveals the bot dispute was not novel. Both AP and Al Jazeera had reported that Twitter had previously cautioned regulators its estimates of fake accounts could be understated. Furthermore, in 2021, the company paid $809.5 million to settle allegations it had inflated user growth and monthly active user numbers.
Judge Charles Breyer has reminded the court that Musk is entitled to a fair trial irrespective of personal opinions about him. Musk himself has moved for a mistrial, claiming he has already been denied one. The platform, now rebranded as X following Musk's takeover, is central to a case that probes the intersection of corporate dealmaking, social media communication, and securities law.