Tesla Lawsuit: Shareholders’ Lawyer Claims Elon Musk ‘Lied’ About Taking Company Private

The attorney representing Tesla investors is alleging that CEO Elon Musk “lied” when tweeting that he had “funding secured” to take the electric car maker private. The investors are seeking “billions” in damages.

The Guardian reports that Elon Musk, the CEO of Tesla, is scheduled to testify in a San Francisco courtroom regarding allegations that he manipulated the price of the company’s stock in 2018 by tweeting about a plan to go private.

A group of shareholders filed a class-action lawsuit, claiming to have lost billions due to Musk’s tweets. The claimants contend that Musk lied when he claimed in an infamous tweet that he had “secured” funding to take Tesla private at a price of $420 per share, causing the stock price to soar.

The trial focuses on whether Musk intentionally manipulated the stock price through his tweets and, if so, how much money investors lost as a result. The jury will also examine whether Musk lied or acted recklessly when he made claims about funding for the potential buyout.

The first witness called to the stand was a 71-year-old investor from Kansas City, Missouri, named Glen Littleton. He claimed that Musk’s tweets worried him because he had invested in Tesla with the expectation that the stock would increase in value above the $420 per share that Musk mentioned. Littleton claimed he cut his losses by selling the majority of his holdings, but the value of his Tesla portfolio fell by 75 percent nonetheless.

Musk and his company are defying legal conventions by refusing to settle claims that pass challenging legal requirements. As a result, the trial could be dramatic, and Musk himself may give testimony. A jury of nine people will decide the case’s outcome after the trial, which is scheduled to last three weeks. Musk may be financially responsible for the losses suffered by investors if found guilty.

Musk doesn’t have many friends in San Francisco due to his recent antics at Twitter. Some prospective jurors described Musk as “narcissistic,” “unpredictable,” and “a little off his rocker” during the jury selection process.

Musk posted the tweets in question on August 7, 2018, where he stated, “Am considering taking Tesla private at $420. Funding secured.” This tweet significantly raised Tesla stock price, increasing the market capitalization by $6.7 billion in a single day. Musk responded to this tweet with several others, one of which stated that the only thing still in the air was a shareholder vote. The buyout, however, never happened, and when the market found out, the stock price dropped significantly.

The plaintiffs contend that Musk misled the public with his tweets and that he knew he lacked the funding necessary to take the company private. They contend that the tweets artificially inflated the stock price, and that shareholders who bought shares around that time suffered sizable losses. Nicholas Porritt, lead attorney for the investors, stated: “Millions of dollars were lost when his lies were exposed.”

Alex Spiro, Musk’s attorney, contends that Musk believed he had the funding to take the company private and that his tweets were not false or misleading. They claim that Musk’s use of the word “secured” was an exaggeration, not a statement of fact. During opening statements, Spiro stated: “You will come to learn very soon that this was not fraud, not even close.”

However, U.S. District Judge Edward Chen, the judge overseeing the trial, has already ruled that Musk’s statements about the status of the deal were false and made recklessly by Musk.

The trial is a significant development for the larger securities industry as well as for Musk and Tesla. CEOs of other companies may face further scrutiny over their use of social media if the jury decides that Musk purposefully or recklessly manipulated the stock price.

Read more at the Guardian here.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan