Twitter inquiry accuses Musk of shorting stock set to close arguments | Elon Musk News

The civil trial centers on a class-action lawsuit filed before Musk took control of Twitter, which was renamed X.

Final arguments are set to begin in the United States trial of Elon Musk against Twitter shareholders, now known as X, who say the world’s richest man engaged in a pattern of fraudulent behavior that misled investors when he tried to back out of a $44bn deal to buy the social media platform in 2022.

Arguments are scheduled for Tuesday.

The civil trial in San Francisco will focus on a class-action lawsuit filed before Musk took control of Twitter, which he then renamed in October 2022, agreeing to buy it for $44 billion, or $54.20 per share. The price represents a fraction of the Tesla CEO’s fortune, now estimated at $839bn.

Much of the trial centered on Musk’s claims about the number of bots on Twitter. Musk testified, as he has long argued, that Twitter has a higher number of fake and spam accounts than the 5 percent disclosed in regulatory filings. They used Twitter’s misrepresentation of the number of fake accounts on its service as a reason to back out of the purchase.

After Musk tried to back out, Twitter went to court in Delaware to force him to honor his original agreement. Before that case was scheduled to go to trial, Musk changed course again and agreed to pay what he had originally promised.

Bots and fake accounts

The issue of bots and fake accounts on Twitter during Musk’s deal negotiations is not new. The company paid $809.5m in 2021 to settle claims that it was overstating its growth rate and monthly user figures. Twitter disclosed its bot estimates to the Securities and Exchange Commission (SEC) for years and warned that its estimate might be too low.

But Musk said the number is at least 20 percent higher, according to some analysts. Saying the bot number is at least this high is “like saying the grass is green or the sky is blue,” Musk said.

Twitter’s former CFO Ned Segal disputed the claim and said on the witness stand that the number was actually closer to 1 percent.

When asked if Twitter submitted false filings to the SEC that misrepresented its spam numbers, Segal said it did not. But he mentions that the company once reassessed its finances after realizing an error in daily user calculations. In 2017, Twitter falsely overstated its monthly user count because it included users of a third-party app it shouldn’t have.

On Monday, the two sides met to give instructions to the jury. Judge Charles R. Breyer noted that many in the jury pool had negative views of Musk. But, he said, a person who is “universally disliked” is still entitled to a fair trial and should not be treated in a discriminatory or prejudicial manner.