Jan 16, 2023 4:43:08 PM IST
Elon Musk will face trial next week for a controversial tweet in which he claimed he had the funds to privatize Tesla at $420 a share. The U.S. District Court for the Northern District of California is scheduled to begin a 10-day, jury-selected civil trial on Tuesday, January 17.
Elon Musk was accused of manipulating Tesla shares when he tweeted that he would take them private at $420 a share and that he had the necessary funds. He apparently set the price at 420 euros because he thought his girlfriend Claire Elise Boucher, also known as Grimes, would find it amusing. Image credit: AFP.
According to the class action lawsuit, Musk’s August 7, 2018 tweet caused investors to lose money: “I’m considering privatizing Tesla for $420. Funding guaranteed.
An October brief by lead plaintiff Glen Littleton said that between August 7 and 17, 2018, investors lost billions of dollars due to Tesla stock, option and bond price volatility caused by Musk and Tesla’s comments. “These losses include losses resulting from the impact on Tesla stock prices immediately after the August 7, 2018 tweets, which were later corrected from August 8, 2018 to August 17, 2018, as the tweets were perceived to be false by investors. …There are no fraudulent statements by Musk and Tesla, these losses would not have been incurred by Tesla’s investors.
Several legal experts believe that Musk will lose, and the only unresolved question is how much he will have to pay compensation. Speaking to Ars Technica, law professor Robert Miller 7 of the University of Iowa School of Law said: “Elon will lose, and he will lose a lot. We’re just talking about exactly how much Musk will have to pay, and how much of inflation and deflation is due to fraud.
Musk’s chances of winning the case may be slim, but the plaintiff still has to show that Musk’s fraudulent comments actually caused investors to lose in order to receive substantial compensation. Investors who bought Tesla shares at inflated prices and then sold them at a loss are suing for billions of dollars in damages.
Musk recommended a price of €420 in a tweet, representing a nearly 20 percent premium on Tesla’s closing price of €349.54 on August 2, 2018. privatization deals.
Musk adjusted the price to 420 euros per share, although the exact calculation was 419.49 euros, because he thought his then-girlfriend Claire Elise Boucher, known as Grimes, would find it funny, given how important this figure is for marijuana users. .
While the jury will decide the case, District Judge Edward Chen has already delivered a landmark decision that makes it harder for Musk to win. In April 2022, Chen partially granted Littleton’s motion for a partial summary judgment, finding that Musk had recklessly misrepresented the facts, adding, “Based on the evidence presented, there is no real doubt that the first three disputed statements were false and that Mr. Musk recklessly made these performances.
Musk still insists that the money was secured. According to the prosecution’s opening statement, Musk’s tweet was sent 30 minutes after the Financial Times reported that the Saudi Arabian Public Investment Fund had acquired a $2 billion investment in Tesla.
According to Musk’s memoir, “Musk was concerned that whoever disclosed the investment was also revealing PIF’s interest in privatizing Tesla, and that such a leak would contain false material that could confuse the market.”
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