Shareholders argued that he misled them from their positions in August 2018 and that they lost billions of dollars because of them.
The proposed $72bn (£60bn) purchase never materialised. If found liable, Musk could be ordered to pay billions in damages.
It took nine jurors less than two hours to reach their verdict on the class-action lawsuit Friday afternoon.
Mr. Musk – who had wanted the trial to move to Texas, where Tesla is based, arguing he could not get a fair trial in San Francisco – welcomed the result.
Last October, he bought the social media platform Twitter for $44 billion. He posted: “Thank goodness, the wisdom of the people has prevailed!
“I am deeply appreciative of the jury’s unanimous finding of innocence in the Tesla 420 take-private case.” He added.
At the center of the lawsuit was Mr. Musk’s tweet on August 7, 2018: “I’m considering taking Tesla private at $420. Funding secured.”
The plaintiffs also argued that Mr. Musk lied when he tweeted later in the day that “investor support has been confirmed”. The share price rose after the tweets but fell again within days as it became clear that the deal would not go through.
Investor losses were calculated as much as $12bn, according to an economist hired by shareholders, after several decisions were made about buying and selling their shares based on the tweets.
The US Securities and Exchange Commission (SEC) sued Mr. Musk over his tweets, accusing him of lying to investors. Mr. Musk agreed to step down as chairman of the Tesla board and settled for $20m.
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Information Source: BBC