(Adds comment by investors' lawyer, Tesla share reaction,
analyst comment)
By Jody Godoy and Hyunjoo Jin
SAN FRANCISCO, Feb 3 (Reuters) - A U.S. jury on Friday
found Tesla Inc CEO Elon Musk and his company were not
liable for misleading investors when Musk tweeted in 2018 that
he had lined up funding to take the electric car company
private.
Plaintiffs had claimed billions in damages and the decision
also had been seen as important for Musk himself, who has
aggressively defended his ability to tweet broadly.
The jury came back with a verdict roughly two hours after
beginning deliberations.
"The jury got it right," Musk's lawyer, Alex Spiro, told
reporters after the verdict. He declined to say more.
Musk was not present in court when the verdict was read.
"We are disappointed with the verdict and are considering
next steps," Nicholas Porritt, a lawyer for the investors, said
in a statement.
Shares of Tesla rose 1.7% in after-hours trading following
the verdict.
"This is a clear positive with background noise clearing on
Tesla from 2018 tweet saga. A dark chapter is now closed for
Musk and Tesla," Wedbush analyst Dan Ives said. Some Tesla
investors had feared that a Musk loss would force him to sell
more Tesla stock, he added.
The world's second-richest person has previously created
legal and regulatory headaches through his sometimes impulsive
use of Twitter, the social media company he bought for $44
billion in October.
Musk's attention has been divided in recent months between
Tesla, his rocket company SpaceX and now Twitter. Tesla
investors have expressed concerns that running the social media
company has taken up too much of his focus.
Tesla shareholders claimed Musk misled them when he tweeted
on Aug. 7, 2018, that he was considering taking the company
private at $420 per share, a premium of about 23% to the prior
day's close, and had "funding secured."
They say Musk lied when he tweeted later that day that
"investor support is confirmed."
The stock price soared after the tweets and then fell again
after Aug. 17, 2018, as it became clear the buyout would not
happen.
Porritt during closing arguments said the billionaire CEO is
not above the law, and should be held be liable for the tweets.
"This case ultimately is about whether rules that apply to
everyone else should also apply to Elon Musk," he said.
Spiro countered that Musk's "funding secured" tweet was
"technically inaccurate" but that investors only cared that Musk
was considering a buyout.
"The whole case is built on bad word choice," he said. "Who
cares about bad word choice?"
"Just because it's a bad tweet doesn't make it fraud," Spiro
said during closing arguments.
An economist hired by the shareholders had calculated
investor losses as high as $12 billion.
During the three-week trial, Musk spent nearly nine hours on
the witness stand, telling jurors he believed the tweets were
truthful. He said he had lined up the necessary financing,
including a verbal commitment from Saudi Arabia's sovereign
wealth fund, the Public Investment Fund. The fund later
backpedaled on its commitment, Musk said.
Musk later testified that he believed he could have sold
enough shares of his rocket company SpaceX to fund a buyout, and
"felt funding was secured" with SpaceX stock alone.
Musk testified that he made the tweets in order to put small
shareholders on the same footing as large investors who knew
about the deal. But he acknowledged he lacked formal commitments
from the Saudi fund and other potential backers.
He said his tweets in general did not always affect Tesla
stock the way he expects.
"Just because I tweet something does not mean people believe
it or will act accordingly," Musk told the jury.
(Reporting by Jody Godoy in California and Hyun Joo Jin in San
Francisco
Editing by Noeleen Walder and Matthew Lewis)
