Elon Musk Trial Opens to Debate Over Nature of Tesla Tweets
The trial over
Elon Musk’s
2018 tweets about potentially taking
Tesla Inc.
TSLA -2.58%
private quickly focused on whether those statements were fraudulent or the rushed shorthand of a chief executive earnestly trying to communicate with shareholders.
The class-action case being tried in federal court centers on Mr. Musk’s tweets more than four years ago floating the possibility of taking Tesla private and the effect they had on individual investors’ decision making.
“Am considering taking Tesla private at $420. Funding secured,” Mr. Musk, then Tesla’s chairman and chief executive, tweeted on Aug. 7, 2018. He later added, “Investor support is confirmed.”
The lead plaintiff, investor
Glen Littleton,
sued Mr. Musk, Tesla and members of Tesla’s board at the time, alleging the tweets were false and spurred swings in the prices for Tesla stock, options and bonds, costing investors billions of dollars. He is seeking damages for those losses. Tesla’s stock closed up 11% the day Mr. Musk tweeted about potentially taking Tesla private, then gave back those gains and fell further as questions emerged about the deal.
“His lies caused regular people like Glen Littleton to lose millions and millions of dollars,”
Nicholas Porritt,
an attorney for Mr. Littleton, said of Mr. Musk during opening statements Wednesday.
Alex Spiro,
an attorney for the defendants, described Mr. Musk’s tweets as shorthand and “funding secured” as a throwaway term that, while technically inaccurate, didn’t differ enough from the actual state of affairs to matter to the market.
“This was not fraud. Not even close,” Mr. Spiro said. “Not all deals that are considered come to pass.”
Mr. Musk, who could testify as early as this week, has said in court filings that he believed he had support from Saudi Arabia’s sovereign-wealth fund to take Tesla private.
U.S. District Judge
Edward Chen,
who is overseeing the trial in San Francisco, chastised attorneys Wednesday morning for making what he characterized as voluminous, last-minute requests.
“I’m not going to accept 150 pages of stuff every night,” Judge Chen said. “I’ve got 300 cases.”
During jury selection on Tuesday, attorneys and Judge Chen zeroed in on prospective jurors’ personal views of Mr. Musk and his takeover of Twitter Inc., as well as the extent to which they could set those views aside. Attorneys for Mr. Musk and Tesla had asked Judge Chen to move the case to Texas on the grounds that Bay Area jurors had been exposed to excessive, negative publicity about Mr. Musk. Judge Chen late last week rejected that request.
Last year, the judge ruled that Mr. Musk’s tweets about potentially taking the company private weren’t true and that he acted recklessly in making them. Jurors are being asked to decide, among other issues, whether the tweets were material to investors.
Mr. Musk last took the stand two months ago in a Delaware trial over his pay package at Tesla. In 2021, he appeared before Delaware’s business-law court to defend Tesla’s roughly $2.1 billion takeover of home-solar company SolarCity Corp. in 2016. A judge sided with Mr. Musk, finding that Tesla hadn’t overpaid, as a group of Tesla shareholders alleged. That decision has been appealed.
Mr. Musk and Tesla each agreed in 2018 to pay $20 million to settle civil charges brought by the Securities and Exchange Commission over the same tweets. Mr. Musk also agreed to step down as chairman of the company, while remaining CEO. He later said in legal filings that he felt pressured to settle with the SEC. Last year, a federal judge denied Mr. Musk’s request to scrap his settlement.
Write to Rebecca Elliott at [email protected] and Meghan Bobrowsky at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
The trial over
Elon Musk’s
2018 tweets about potentially taking
Tesla Inc.
TSLA -2.58%
private quickly focused on whether those statements were fraudulent or the rushed shorthand of a chief executive earnestly trying to communicate with shareholders.
The class-action case being tried in federal court centers on Mr. Musk’s tweets more than four years ago floating the possibility of taking Tesla private and the effect they had on individual investors’ decision making.
“Am considering taking Tesla private at $420. Funding secured,” Mr. Musk, then Tesla’s chairman and chief executive, tweeted on Aug. 7, 2018. He later added, “Investor support is confirmed.”
The lead plaintiff, investor
Glen Littleton,
sued Mr. Musk, Tesla and members of Tesla’s board at the time, alleging the tweets were false and spurred swings in the prices for Tesla stock, options and bonds, costing investors billions of dollars. He is seeking damages for those losses. Tesla’s stock closed up 11% the day Mr. Musk tweeted about potentially taking Tesla private, then gave back those gains and fell further as questions emerged about the deal.
“His lies caused regular people like Glen Littleton to lose millions and millions of dollars,”
Nicholas Porritt,
an attorney for Mr. Littleton, said of Mr. Musk during opening statements Wednesday.
Alex Spiro,
an attorney for the defendants, described Mr. Musk’s tweets as shorthand and “funding secured” as a throwaway term that, while technically inaccurate, didn’t differ enough from the actual state of affairs to matter to the market.
“This was not fraud. Not even close,” Mr. Spiro said. “Not all deals that are considered come to pass.”
Mr. Musk, who could testify as early as this week, has said in court filings that he believed he had support from Saudi Arabia’s sovereign-wealth fund to take Tesla private.
U.S. District Judge
Edward Chen,
who is overseeing the trial in San Francisco, chastised attorneys Wednesday morning for making what he characterized as voluminous, last-minute requests.
“I’m not going to accept 150 pages of stuff every night,” Judge Chen said. “I’ve got 300 cases.”
During jury selection on Tuesday, attorneys and Judge Chen zeroed in on prospective jurors’ personal views of Mr. Musk and his takeover of Twitter Inc., as well as the extent to which they could set those views aside. Attorneys for Mr. Musk and Tesla had asked Judge Chen to move the case to Texas on the grounds that Bay Area jurors had been exposed to excessive, negative publicity about Mr. Musk. Judge Chen late last week rejected that request.
Last year, the judge ruled that Mr. Musk’s tweets about potentially taking the company private weren’t true and that he acted recklessly in making them. Jurors are being asked to decide, among other issues, whether the tweets were material to investors.
Mr. Musk last took the stand two months ago in a Delaware trial over his pay package at Tesla. In 2021, he appeared before Delaware’s business-law court to defend Tesla’s roughly $2.1 billion takeover of home-solar company SolarCity Corp. in 2016. A judge sided with Mr. Musk, finding that Tesla hadn’t overpaid, as a group of Tesla shareholders alleged. That decision has been appealed.
Mr. Musk and Tesla each agreed in 2018 to pay $20 million to settle civil charges brought by the Securities and Exchange Commission over the same tweets. Mr. Musk also agreed to step down as chairman of the company, while remaining CEO. He later said in legal filings that he felt pressured to settle with the SEC. Last year, a federal judge denied Mr. Musk’s request to scrap his settlement.
Write to Rebecca Elliott at [email protected] and Meghan Bobrowsky at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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