Elon Musk Defends Twitter Acquisition Tactics in High-Stakes Securities Fraud Trial

Elon Musk defends his 2022 Twitter takeover in federal court as former investors allege market manipulation through social media ahead of the $44 billion deal.

By: AXL Media

Published: Mar 9, 2026, 11:41 AM EDT

Source: CNBC

Allegations of Market Manipulation and Price Pressure

The plaintiffs, a group of former Twitter shareholders, allege that Musk engaged in a deceptive scheme to drive down the company's valuation. By publicly attacking the platform over "bot" problems and threatening to abandon the purchase, investors claim Musk created artificial volatility to pressure the Twitter board into accepting a lower acquisition price. The legal team for the investors presented evidence suggesting that shareholders sold their positions at a loss during this period of uncertainty, missing out on the final $54.20 per share payout when the deal eventually closed at its original terms.

Musk Testifies on Social Media Impact and Market Volatility

During his testimony, Musk addressed the influence of his communications on financial markets, characterizing the stock market as "manic depressive." When questioned about his awareness of how his tweets moved stock prices, Musk argued that his posts often have unpredictable or even opposite effects than what observers might expect. His defense maintains that his concerns regarding spam accounts and bots were genuine and not a pretext for price negotiation. Musk’s attorneys are working to prove that he lacked the "scienter," or fraudulent intent, required for a securities fraud conviction.

Regulatory Scrutiny and the SEC Investigation

The civil trial is unfolding alongside a separate investigation by the Securities and Exchange Commission (SEC). Federal regulators have accused Musk of violating disclosure rules by failing to report his initial 9.1% stake in Twitter within the legally mandated timeframe. This delayed disclosure allegedly allowed Musk to continue purchasing shares at a lower price before the market reacted to his takeover bid. The outcome of the San Francisco trial could significantly impact these parallel regulatory proceedings and potentially lead to substantial financial penalties or restitution for affected investors.