Trial begins against Elon Musk for a 2018 tweet about Tesla
Plaintiffs are seeking multi-million dollar compensation for a 2018 tweet in which the EV maker's CEO said he had raised funds to oust the company from the stock market, something that never materialized
Elon Musk is facing an investor trial after being accused of corporate fraud with Tesla. (AP)
A federal court in San Francisco (California, United States), began a trial against Elon Musk and Tesla in which investors seek multimillion-dollar compensation for a 2018 tweet in which the EV maker's CEO said he had raised funds to get the company out of business the stock market, something that never materialized.
This Tuesday's session was dedicated to the jury selection, which could conclude today or continue throughout the week.
The shareholders who filed this class action claim that these statements caused them to lose billions of dollars for the fluctuations they caused in the firm's price, and maintain that Musk was lying when he made that announcement.
Now, more than four years later, the businessman must convince a jury that he was telling the truth or that the price of the securities could have varied for other reasons.
“ I'm considering taking Tesla public at $420. Secured financing”, read the controversial tweet in which Musk referred to the price per share that he could offer in the operation, which would have valued the company at around 72,000 million dollars.< /p>
The shareholders who filed this class action claim that these statements made them lose billions of dollars for the ups and downs they caused in the firm's listing, and maintain that Musk was lying when he made that announcement. (AFP)
In principle, Musk and Tesla start at a disadvantage, as the judge in charge of the case, Edward Chen, already considered it proven last year that the tweet in question and others that he published later were “false and misleading”.
Furthermore, already in 2018 Musk was accused by the US Securities and Exchange Commission (SEC) of fraud for his post on Twitter and the businessman accepted a $20 million fine as a sanction< /b>and leaving for at least three years as chairman of the company's board of directors, although he continued to be its CEO.
In its complaint, the SEC accused Musk of falsely claiming he had a chance to take Tesla public having secured “a multi-million dollar transaction” and only lacking a shareholder vote.
“The reality and the truth is that Musk had not even discussed, let alone confirmed, the key terms of the agreement with any potential funding source,” the SEC filing stated.
The investors who filed the lawsuit bought or sold Tesla stock in the days immediately following the company chief's announcement and are seeking unspecified compensation for a situation they say cost them together billions of dollars.
In principle, Musk and Tesla start at a disadvantage, since the judge in charge of the case, Edward Chen, already considered the year proven past that the tweet in question and others he posted later were “false and misleading.” (REUTERS)
Musk's tweet sent Tesla's share price soaring, to then fall a few days later when the media began to report that he did not actually have that financing secured.
The billionaire businessman, for his part, has insisted that he had an agreement with the Saudi sovereign wealth fund to support his plan to take the company public, but it is not clear that this was true or that he can prove it.
Among the arguments that his defense has hinted at in pre-trial documents is the idea that the oscillations seen in Tesla's price could be due to true statements, such as that Musk was considering taking the firm public.
The process began this Tuesday in San Francisco with the selection of the jury and the judge said that it is expected to be completed in approximately three weeks, with the presentation of evidence and arguments, until the beginning of February, plus the time necessary for deliberations.
The process began this Tuesday in San Francisco with the selection of the jury and the judge said that it is expected to be completed in approximately three weeks, with presentation of evidence and arguments, until the beginning of February, plus the time necessary for deliberations. (REUTERS)
Recently, Musk's lawyers tried unsuccessfully to move the trial from California to Texas over alleged “local negativity” in the San Francisco area against the tycoon, particularly after his purchase of Twitter and his decision to lay off thousands of employees of that company, which is based in the city.
According to they claimed, this situation could harm the defendant and prevent a fair trial from being held, but the judge rejected the request.
(With information from EFE)