In the trial of investor fraud allegations against Tesla boss Elon Musk, a lawyer for the tech billionaire admitted false information in weighty tweets from the summer of 2018. However, this was just an unfortunate choice of words under time pressure and not an attempted fraud. he said in his opening statement Wednesday.
The procedure concerns messages (tweets) that Musks hastily announced in the short message service Twitter from August 2018 that he wanted to take the electric car company off the stock exchange and had arranged the financing for it. It later turned out that there were no firm commitments from investors. Investors base their class action lawsuit against the board of directors of Musk and Tesla on this.
“Elon Musk lied,” said a prosecutor’s attorney. These lies would have cost ordinary investors like his clients millions, he argued. It cannot be denied that in reality the financing was not secured. And Musk’s tweets alone would have caused the price swings that would have caused investors to lose money.
Musk’s lawyer: ‘His intentions were just’
Musk’s lawyer countered that the tech billionaire was certainly working to take Tesla private. There are also positive signals from potential donors. Musk chose the wrong words “in a hurry” when tweeting. He would rather have written that financing should not be a problem. “It wasn’t fraud, not even close,” the lawyer said.
At that time, the Sovereignty Investment Fund of Saudi Arabia played an important role, namely as a central donor in the plan. Musk’s side claims a senior manager of the fund has raised the prospect of expanded funding in talks. Plaintiffs’ lawyers point out that there were no agreements on this.
During the negotiations, the fund also announced for the first time that it had acquired a roughly five percent stake in Tesla and was interested in further acquisitions, Musk’s lawyer said. Subsequently, this information was leaked to the Financial Times.
Musk hastily responded to the leaks with his tweets, expressing himself awkwardly. But “what the words meant from his own point of view” was true. “His intentions were sincere,” said the lawyer.
Plaintiffs opted out of options because of Musk
The first to be questioned was one of the accusers, a 71-year-old from Kansas City. He said Musk’s tweets prompted him to abandon options on Tesla stock in a big way. He feared that the financial instruments would be worthless once Tesla went public. Plaintiff argues that the words “funding assured” were decisive for this decision.
During the investigation, Musk’s lawyer repeatedly referred to a later Tesla blog post, which emphasized that the transaction had not yet been completed. He also attempted to undermine the plaintiff’s credibility in the eyes of the jury, including asking if he joined the lawsuit after a negative experience delivering a Tesla car.
trouble brewed
Judge Edward Chen found in the proceedings last year that Musk’s statements in the tweets were not true. While the jury is made aware of this at trial, it is expected to assess whether those statements were relevant to investors — and harmed them by relying on them. They also need to determine whether Musk knew he was making false statements.
The tweets had already gotten Musk and Tesla into a lot of trouble. The 51-year-old and the company each paid $20 million in fines for misleading investors, according to the SEC’s investigation. In addition, Musk had to give up the chairmanship of the board of directors and commit to having Tesla approve potentially price-sensitive tweets.
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Source: Watson
I’m Ella Sammie, author specializing in the Technology sector. I have been writing for 24 Instatnt News since 2020, and am passionate about staying up to date with the latest developments in this ever-changing industry.
