Elon Musk found not responsible in ‘funding guarantee’ class action lawsuit
Elon MuskCEO of TeslaSpaceX and Twitter, have successfully defended themselves in a class-action lawsuit claiming damages from his scandalous tweet, where he claims to have “secured funding” for Tesla’s privatization.
After a three-week trial, a nine-person jury unanimously ruled in Musk’s favor. Musk wasn’t in court to hear the verdict today, but took to the social media he now owns to say: “Thank goodness, human intelligence prevailed.”
Plaintiffs have sought billions of dollars in damages caused by Musk August 8, 2018 where he stated: “I am considering privatizing Tesla at $420. Funding is guaranteed.”
He followed up a few hours later, stating: “Investor support confirmed. The only reason this is uncertain is that it depends on shareholder votes.”
A week later, Musk admitted funding was not guaranteed, but had active discussions with Saudi Arabia’s sovereign wealth fund, where he deduced that the fund “clearly” has the means to help automakers transition to privatization.
Edward Chen, the judge presiding over the case, ruled last year that Musk’s claims of “guaranteed funding” were false and directed the jury to do so.
The first tweet sent Tesla’s stock price skyrocketing about 11% to about $380. The plaintiffs argued that Musk’s tweets were designed to manipulate the company’s stock price, which plummeted two weeks later when Tesla scrapped plans to go private.
At the time, Musk cited “limited internal compliance issues.” [large investors] could invest in a private company,” and said the whole process was “more time consuming and distracting than initially anticipated.”
Musk appeared on a stand to defend himself, reiterating his beliefs about funding and declaring: “I have no ill motives. My intention is to do the right thing for all shareholders.”
In the final argument for the lawsuit, Nicholas Porritt, an attorney representing the investors, said: “Our society is based on rules. We need rules to save us from chaos. The rules should apply to Elon Musk like everyone else.”
Alex Spiro, one of Musk’s lawyers, acknowledged the CEO’s tweets were “technically incorrect,” but countered that “just because it’s a bad tweet doesn’t mean it’s a scam.” “.
After the ruling, Porritt said in a statement seen by Reuters“We are disappointed with the ruling and are considering next steps.”
Tesla shares rose several dollars in trading hours after the ruling was announced. Many argue that investors are worried that Musk will have to sell more Tesla stock to compensate for the damage caused by the guilty verdict.
The Tesla CEO has repeatedly reduced his stake in the automaker to fund a $44 billion ($63.5 billion) purchase of Twitter.
Tesla’s value has nearly halved since Musk took control of Twitter, in part due to his massive stock sell-off, but also to his controversial management of the social media company. and his perceived lack of focus on the automaker.
This isn’t the first time Musk’s “funding secured” tweet has gotten the outspoken CEO in financial trouble. In September 2018, he settled a lawsuit brought by the U.S. Securities and Exchange Commission (SEC), where he agreed to a $20 million fine and resigned as chairman, although he is allowed to continue as CEO.
After the settlement, Steven Peikin, co-director of the SEC Enforcement Division, told the press: “Company officials hold trusted positions in our market and have significant responsibilities. for shareholders.
“An officer’s celebrity status or reputation as a technology innovator does not permit those responsibilities to be taken lightly.”