Tweet triggered price fluctuations
Tesla boss Musk faces defeat in court
04/17/2022, 07:17 am
With a tweet about a possible takeover of Tesla, Elon Musk is causing price fluctuations and losses among investors. They are taking legal action against the alleged false statements. A partial decision should already have been made.
A US judge has ruled that Tesla CEO Elon Musk’s tweet about his company’s delisting was “false and misleading”. According to documents filed with the court, federal judge Edward Chen, in an unpublished partial decision in the case between the electric car company and investors, concluded that Musk “recklessly and knowingly” disseminated false facts in 2018.
The document is part of a lawsuit filed by investors against Tesla and Musk for securities fraud. They accuse Musk of triggering price fluctuations and inflicting heavy losses on them with a Twitter post on August 7, 2018. In that tweet, Musk claimed that he had “secured” funding to take Tesla private at $420 per share.
Musk only insisted on Thursday that his statements at the time were correct. Accordingly, at the time he was in talks with the Saudi Arabian sovereign wealth fund about buying up all Tesla shares and was confident that these negotiations could be concluded successfully. However, no agreement was ever announced.
Trouble with the stock exchange regulator
Investors are now asking the judge to bar Musk from repeating the allegations. The plaintiffs accuse Musk of promoting “an inconsistent and incorrect” interpretation of the tweet in question, which could bias a jury in a court hearing scheduled for May.
In addition to the investor lawsuit, Musk had also gotten into trouble with the US Securities and Exchange Commission through the tweet. They had also accused him of fraud. In a settlement, Musk eventually agreed to step down as chairman of Tesla’s board of directors and pay a $20 million fine.
He also committed to requiring lawyers to pre-approve his tweets that directly relate to Tesla’s business. Musk challenged this last measure in court in early March. He said Thursday he was forced into the deal with the SEC to save Tesla. Musk is currently trying to buy Twitter himself.