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What's Actually at Stake for Elon Musk in His Securities Fraud Trial

Musk could settle with plaintiffs at any time during the trial, or the appeals process could drag this thing out for years.
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Some tweets are more trouble than they're worth.

Elon Musk is currently learning that lesson as his trial over a tweet makes its way through the court system. 

"Am considering taking Tesla private at $420. Funding secured." Musk tweeted on Aug. 7, 2018.

Just days later on Aug. 10, 2018, investors sued Musk and Tesla alleging the statement was fraudulent; fast forward to Jan. 2023 and the trial for that lawsuit is underway.

What's At Stake for Musk 

The class action lawsuit was brought by Tesla investors who owned the stock over a 10-day period -- between August 7 and August 17. They allege their holdings were negatively affected by the tweet. 

The shareholders have not specified how much in damages they're seeking, but Eduard Korsinsky, an attorney for the class of investors, alleged billions of dollars in losses are at stake for his plaintiffs in an interview with Reuters. 

While the trial is scheduled to run for three weeks -- Musk has spent two days on the witness stand being cross-examined by lawyers -- a settlement could be reached at any time during the proceeding. 

However, if the shareholders win and are awarded damages, it will likely take years for them to collect their judgment due to the lengthy appeals process, Reuters noted. 

Class action lawsuits are civil lawsuits, meaning that any penalties Musk faces will be financial.

Price Musk Has Already Paid

The U.S. Securities and Exchange Commission already settled with Musk in 2018, mandating that he step down as Chairman of Tesla for three years and fining Musk and his company $20 million each. 

That money was to be paid to "harmed investors" as part of the settlement. 

However, Musk appealed that settlement in 2022, asking the 2nd U.S. Circuit Court of Appeals in Manhattan to overturn a decision allowing his consent decree with the SEC to stand. 

Musk did not have to admit to any wrongdoing as part of the settlement, and Musk has argued in his appeal that he was coerced into accepting the terms of that settlement.