New York, Jan 17 (EFE).- A federal court in San Francisco, California, began a lawsuit Tuesday against Elon Musk and Tesla, as several investors seek compensation for a 2018 tweet in which the magnate said he had raised funds to take the company public, which never materialized.
The shareholders who filed this class action claim these statements caused them to lose billions of dollars due to the swings they caused in the company’s price, and say Musk was lying when he made that announcement.
Now, more than four years later, the businessman must convince a jury he was telling the truth or that the price of the securities could have varied for other reasons.
“I am considering taking Tesla public at $420. Financing secured,” said the controversial tweet in which Musk referred to the price per share he could offer in the transaction, which would have valued the company at about $72 billion.
In principle, Musk and Tesla start at a disadvantage, since the judge in charge of the case, Edward Chen, already considered proven last year that the tweet in question and others that he published later were “false and misleading.”
In addition, already in 2018 Musk was accused by the United States Securities and Exchange Commission of fraud for his publication on Twitter and the businessman accepted a fine of $ 20 million. He also was made to leave as president of the company’s board of directors for at least three years, although he continued to be its CEO.
In its complaint, the commission accused Musk of falsely saying he had the ability to delist Tesla by securing “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 commission filing read.
The investors filing 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 that they say collectively cost them billions of dollars.
Musk’s tweet sent Tesla’s share price soaring, only to fall a few days later when news outlets began reporting he didn’t actually have that funding secured.
The billionaire businessman, for his part, has insisted he had a deal with the Saudi sovereign wealth fund to support his plan to take the company private, 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 with the selection of the jury and the judge said 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 the jury’s deliberations.
Musk’s lawyers recently tried unsuccessfully to move the trial from California to Texas over alleged “local negativity” in the San Francisco area against the mogul, particularly after his purchase of Twitter and his decision to fire thousands of employees based in the city.
As they claimed, this situation could harm the defendant and prevent a fair trial from being held, but the judge rejected the request. EFE