Elon Musk’s tweet that funding was secured to take Tesla private was misleading and reckless: court
Elon Musk’s 2018 tweets saying funding was secured to take Tesla private were inaccurate and reckless because there was ‘nothing concrete’, court says
Tesla CEO slammed by judge for misleading tweets which cost firm billionsMusk has battled with Wall Street regulator SEC for trying to inflate stock price’Discussions were clearly at the preliminary stage’, court said of ‘done’ deal’No reasonable jury could find that Mr Musk did not act recklessly’: District JudgeMusk was removed as Tesla chairman amid SEC fraud charges filed a month laterHe paid $40million settlement in 2018 and remains banned from tweeting freely
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Elon Musk recklessly misled investors when he said that funding was ‘secured’ to take Tesla private, a court has ruled.
The Tesla CEO claimed in August 2018 that the Saudi Public Investment Fund (PIF) had agreed to finance the company’s move private.
‘Am considering taking Tesla private at $420’, he wrote on August 7. ‘Funding secured.’
Tesla CEO Elon Musk (pictured at last week’s Met Gala) tweeted inaccurately and recklessly about his company’s readiness to go private, a US District Judge ruled in unsealed documents
That led the company’s shares to jump by six per cent.
But Musk’s claims weren’t true, according to Wall Street regulator the Securities and Exchange Commission (SEC) – and, now, a US District Court in San Francisco.
Judge Edward Chen wrote last month, according to files unsealed today: ‘There was nothing concrete about funding coming from the PIF.
‘Rather, discussions between Tesla and the PIF were clearly at the preliminary stage.
‘No reasonable jury could find that Mr. Musk did not act recklessly given his clear knowledge of the discussions.’
He said details such as the total amount of funding needed to take Tesla private or the price to be paid for Tesla stock were not discussed.
Musk’s controversial claim on August 7 prompted the SEC to sue the CEO for securities fraud.
Tesla was also charged with failing to require disclosure controls and procedures relating to its CEO’s tweets.
Musk was forced to step down as chair of Tesla’s board of directors and pay a $40million settlement.
To this day, his tweets are carefully watched by Tesla staff to prevent him doing the same.
The settlement dictated ‘additional controls and procedures to oversee Musk’s communications’.
Tesla investors who are accusing Musk of habitually inflating Tesla’s share price with eye-grabbing public statements see Judge Chen’s ruling as a victory.
Bringing lawsuits of their own, the aggrieved investors blame billions of dollars in losses on gyrations in the share price caused by Musk’s tweets.
Their suit is heading to trial in January just as is trying to close a deal to buy Twitter.
Musk’s lawyer, who has filed motions to undo the court decision, was not immediately available for comment.
Musk said recently that funding was secured to take Tesla private in 2018.
