News JVTech Elon Musk: why is the Tesla boss targeted by a lawsuit because of his tweets?
Published on 01/20/2023 at 12:40
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Since Tuesday, January 17, Elon Musk has appeared in court in San Francisco. If some of the billionaire’s tweets are at the heart of this affair, it actually mainly concerns his link with Tesla. Explanations.
Long before owning Twitter, Elon Musk was already very talkative on the social networkand some of his tweets landed him in court in San Francisco. Since January 17 and for three weeks, Elon Musk is tried there for fraud. But that has nothing to do with his takeover of Twitter.
Indeed, the businessman is, here, accused of manipulating Tesla stock price in 2018 posting a series of tweets discussing the company’s delisting. A case that could cost him dearly, while the billionaire is expected to take the helm this Friday.
A $420 Tesla Stock Story
The boss of Tesla must now know: posting messages on Twitter is nothing trivial when you are a billionaire followed by millions of people. But it is a little late to learn the lesson. In August 2018, Elon Musk therefore published a series of tweets in which he implied that he was going to take Tesla off the stock exchange by recovering each share for 420 dollars. He even added that the funding was “secure”.
Shareholders could either to sell at 420 or hold shares & go private
— Elon Musk (@elonmusk) August 7, 2018
The consequence of this declaration had been a sharp rise in the value of Tesla stock at the timesince many buyers, attracted by the lure of profit, had decided to buy: a jump up to $386.48 which, however, did not last: indeed, a few days later, Elon Musk declared in an interview with the New York Times that “420 dollars was a joke”. The stock had then fallen to $335.45, causing investors to lose millions.
« Elon Musk a menti »
“Elon Musk, (then) CEO of Tesla, lied, and his lies cost people millions of dollars,” plaintiffs attorney Nicholas Porritt told the San Francisco court last Wednesday. It’s through a collective action that a group of investors decided to file a complaint against Musk, who they said “artificially manipulated the price of Tesla’s stock in order to completely ruin investors”.
“The plaintiffs claim that these tweets were factually false and artificially affected Tesla’s stock price and other securities,” Judge Edward Chen summed up for potential jurors. An observation which Elon Musk defends himself via his lawyer Alexander Spiro : according to the defense, the billionaire had the ambition to take Tesla out of the stock market. His main mistake would have been to “tweet too quickly”, following an article in the Financial Times which revealed that the Saudi fund had invested in Tesla.
The defense is therefore counting on a “reckless” tweet, but which is “not a fraud”. She adds that during this period neither Elon Musk nor any other board member sold a single shareproof, according to her, that the objective was not to take advantage of it.
A case that has already had consequences for Elon Musk
The next two weeks will be decisive in this case. However, we can already point out that it has already had major consequences for Elon Musk. Indeed, the SEC, policeman of the Stock Exchange in the United States, has Billionaire Forced to Step Down as Chairman of Tesla’s Board of Directors in 2018, believing that he had not provided proof of his financing. He also had to pay $20 million fine and surround yourself witha team of lawyers dedicated to validating his tweets around Tesla.
Today, Elon Musk hopes this trial will end on proof of his not guilty and will allow him to regain his place on Tesla’s board of directors, but nothing says that this will indeed be his outcome.