Musk Faces Billions in Damages as Trial Over “False and Misleading” Tweets Begins

  • Tesla CEO Elon Musk is currently facing a securities fraud trial over tweets he made in 2018 about taking the company private at $420 per share and having “secured” funding for the bid.
  • Shareholders who traded Tesla stock following the tweets are suing Musk for billions of dollars in damages, claiming that his tweets led to them losing “millions and millions of dollars.”
  • Musk’s lawyers say that the words “funding secured” in his tweet were poorly phrased but explained they were merely his “informal, sporadic thoughts.” 

Vishwam Sankaran from The Independent writes:

Tesla chief Elon Musk may lose billions in a securities fraud trial underway in San Francisco over his past tweets about taking his electric car company private.

In the notorious 2018 tweet, Mr Musk had said he was “considering taking Tesla private at $420”, adding that he had “secured” funding for the bid.

In the current lawsuit, shareholders who traded Tesla stock in the days following the tweet are suing the world’s second richest person for billions of dollars in damages.

The shareholders’ lawyers say Mr Musk’s tweets led to “regular people” losing “millions and millions of dollars,” The Verge reported.

The US Securities and Exchange Commission’s rules note that publicly traded companies must not announce their financing plans if their executives do not intend to complete it, or if they lack a “reasonable belief” that it will be completed.

So the Trial’s outcomes seemingly depend on the language and intent of Mr Musk’s tweet.

Mr Musk had explained in a 2018 blog post that he had strongly expressed his support for “funding a going private transaction” for Tesla at a meeting with Saudi officials.

“I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving. This is why I referred to “funding secured” in the August 7th announcement,” he explained.

See full story here.

Categories: Business, Tech

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