Elon Musk wins investor lawsuit over Tesla’s ‘funding secured’ tweet

Elon Musk has defeated a shareholder lawsuit alleging that tweets claiming he had “guaranteed funding” to cost Tesla private investors billions of dollars.

The ruling was delivered Friday in San Francisco federal court after a three-week trial, in a victory for the billionaire, the electric vehicle maker’s chief executive.

The nine-person jury took less than two hours to reach a unanimous decision, justifying Musk’s decision to take the case to trial rather than settle.

“Thank goodness, human wisdom prevailed!” musk wrote on Twitter after the ruling. “I appreciate the jury’s consensus on innocence in the Tesla private case 420.”

Outside the courtroom, Musk’s attorney Alex Spiro said: “The jury did the right thing.”

Representing thousands of people Tesla investors in the class action, chief attorney Nicholas Porritt has seen the case as an important test of rules and regulations for financial markets and society at large, during the debates. ended earlier on Friday.

“The rules that apply to everyone else should apply to Elon Musk,” Porritt said. “Elon Musk posted false tweets, recklessly disregarding the truth, and those tweets harmed investors. A lot of harm.”

“All American companies are watching,” he concluded.

After the ruling, Porritt told reporters: “Security fraud cases are difficult, difficult to prove. . . This is not the behavior we expect from the CEO of a public company.”

Speaking with the plaintiff’s attorney after the ruling, as is allowed in the US court system, a juror said the case was “organized” and affected investors testified in the trial was “ineffective”.

Another said the case was “sometimes confusing in layman’s terms. I don’t understand stocks. I don’t invest in options.”

The case centered on Musk’s August 7, 2018 tweet claiming that he was considering buying Tesla privately for $420 a share and had secured funding to do so. It sent the stock into a tailspin, with Nasdaq temporarily halting trading in the electric vehicle company due to volatility.

During the trial, and again during the plaintiff’s final argument on Friday, jurors were shown a chart detailing the jump in Tesla’s stock price immediately following the lawsuit. controversial tweets. Shares rose to $379.57 on the day of Musk’s tweet, and then fell to $305.50 when it became clear that the move to privatization would not happen.

While Musk has held discussions with Saudi Arabian investors to take the company private, no deal has been made. But Spiro said Musk didn’t misrepresent have fundingand raising the required amount is “not a problem”, as Musk’s stake in his company SpaceX can be used to cover any shortfall if needed.

Spiro told the jury that while Musk was serious about privatizing Tesla and may have raised enough capital to do so, the company didn’t move to privatization because “shareholders wanted to continue.” public”.

Spiro continued: “That was his motive – to do what was right for the shareholders.

“Ultimately, no matter what you think of him, this is not a ‘bad tweeter’ test,” he added. “This is a ‘was this man guilty of fraud’ trial.”

Earlier in the trial, Spiro said the “funding secured” tweets were “a snap decision” from Musk in response. an article in the Financial Times is preparing to publish about Saudi Arabia’s Public Investment Fund buying a $2 billion stake in Tesla. Musk said he was concerned news of the private talks would leak.

At issue is whether such actions cause physical harm by misrepresenting the company’s position in a way that would cause a “reasonable investor” to buy or sell Tesla stock. “When Elon tweets about Tesla, people listen,” Porritt said.

Jurors heard earlier in the trial from Glen Littleton, the lead plaintiff, that he interpreted the tweet to mean Tesla’s move to private was “totally determined in my mind.”

Another investor, Tim Fries, bought Tesla stock for $380 and believes the company will go private at $420, as Musk suggested in his tweet. “I lost money,” Fries told the jury, saying Musk’s tweet “gave me confidence” that his investment was the right one.

This is the second time Musk has been found not liable in a civil lawsuit over posts on Twitter, the social media platform he currently owns. In 2019, a jury in Los Angeles cleared him of a defamation statement over a tweet in which he called a British diver a “prostitute”.

However, the “sponsorship secured” tweet has proven costly in other ways. He and Tesla each paid $20 million to settle legal action from the Securities and Exchange Commission. Musk also had to step down as chairman of the automaker, despite remaining as chief executive officer.

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