February 26, 2024

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Elon Musk is going experiment on his 2018 plan to take Tesla Private

Elon Musk is going experiment on his 2018 plan to take Tesla Private

More than four years after he said he secured the financing to take Tesla out of the stock market, Elon Musk will try to defend that statement in a trial that opens Tuesday in San Francisco federal court.

The case is brought by investors who claim mr. Musk, the CEO of the electric car maker, had never actually pooled the money to take Tesla private, and was acting reckless in discussing the embryonic plan to do so. If the plaintiffs get a jury to rule in their favor, Tesla and Mr. Musk may have to pay billions of dollars in damages.

The trial focus on what mr. Musk said on Twitter, which he acquired in October. “I’m thinking of taking the Tesla private at $420. Financing secured,” he said. wrote in a post in August. 7, 2018.

Tesla’s share price jumped after the tweet was posted but sank after the proposal failed. The plaintiffs, Glenn Littleton and other investors, assert that Mr. Musk’s actions were responsible for the losses they incurred in Tesla stock movements.

The company Mr. A. Musk and their attorneys defended the post and said it was not an indiscretion.

the master. Musk and Tesla have settled a separate lawsuit filed by the Securities and Exchange Commission over his plan to take the company private. They paid fines to the SEC, and Mr. Musk has agreed to step down as chairman of Tesla and to have some statements he makes about the company on social media reviewed by an attorney before they are made public.

The investors’ lawsuit will be heard in US District Court at a difficult time for Mr. Musk and Tesla. The company sells fewer cars than executives promised and analysts predicted. Force Tesla to cut prices. Twitter revenue fell Because many companies no longer display ads on the platform after mr. Musk’s wrong behavior and his decision to fire the vast majority of the company’s employees.

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The case may be difficult for the master. Legal experts said Musk and Tesla. The senior county judge who heard the case, Edward M. Chen, ruled last year that he agreed with the plaintiffs that Mr. Musk’s 2018 Twitter posts about taking Tesla private were false and that Mr. Musk was, in the words of the investors, “willfully reckless” about the truth when making these statements.

“I have already received a summary sentence for recklessness and false statement,” said Adam Pritchard, a professor of law at the University of Michigan. “These are the two most common defenses to which defendants prevail.”

However, Judge Chen did not take the side of the investors in other parts of their case – this could give Mr. Musk is a path to victory. Plaintiffs must show that the money they lost in Tesla shares was related to a statement from Mr. Legal experts said Musk is found by the court to be false, such as the claim that he obtained the funding.

the master. Musk could prevail if the jury finds that other statements he made were true and that those statements caused movements in Tesla stock.

In court documents, his attorneys have cited statements they believe fit that description. For example, Alex Spiro, one of the A.S. Musk’s lawyers have argued that the movements in Tesla stock could have been caused by his “indisputably true” statement that he “was considering taking Tesla private.”

“Any ordinary defendant would settle this case, but he has something worth trying,” said the master. Pritchard said.

Tesla, mr. musk and mr. Spiro did not respond to requests for comment.

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while mr. Musk has long struggled to show he has the funding to take Tesla private, and may seek new evidence and testimony in court that supports him. He confirmed that the Public Investment Fund in the Kingdom of Saudi Arabia agreed to provide financing.

Text messages between Mr. Misk and Yasser Al-Rumayyan, who oversees the Saudi fund, appeared early last year in court files. messages appear mr. Musk asked about the fund’s commitment to the deal. the master. Al-Rumayyan replies that Tesla did not provide enough information.

“This is a very weak statement and it doesn’t reflect the conversation we had at Tesla,” said Mr. “You said you were definitely interested in taking Tesla private and have wanted to do it since 2016,” Musk wrote in the August 2018 text.

“It’s up to you, Elon,” mr. Al-Rumayyan replied. In a later text, he added: “We can’t agree to something we don’t have enough information about.”

the master. Mask’s legal team summoned Mr. Al-Rumayyan and other employees of the Saudi Fund are seeking to force them to testify at trial. But lawyers for the fund told the court on Thursday that the subpoenas were “legally flawed” and “frankly frivolous.” The next day, mr. Musk’s attorneys told the court that they are no longer pursuing subpoenas.

A spokesman for the Saudi Public Investment Fund did not respond to requests for comment.

Later in August 2018, Mr. Musk said in a blog post that Tesla will remain a public company.

The lawsuit dates back to a very different time for Tesla. In 2018, the automaker has been fighting mightily to ramp up production. Soon, the problems abated, and sales rose rapidly. The company started out so well that many investors thought it would dominate the auto industry. Tesla’s market capitalization has exceeded $1 trillion.

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But in the past year, investors have re-evaluated the company’s prospects as it reported disappointing sales numbers and mr. Musk sold large amounts of stock to raise money for its Twitter acquisition. Tesla’s share price has fallen about 65 percent in the past year.

the master. Musk and his lawyers have tried to delay the trial, including a request this month that Judge Chen transfer the case to the Western District of Texas, which includes Austin, where Tesla moved its headquarters in 2021. Local media has “satiated” the Bay Area, Tesla’s former home, the lawyers said. , with “biased and negative stories about Mr. Musk” that would hurt jurors. Judge Chen denied that request on Friday.

During jury selection on Tuesday, Mr. Spiro questioned prospective jurors about their personal opinions of Mr. Musk and Tesla ask if they can stay neutral. Judge Chen warned Mr. Spiro wrote that his speeches to prospective jurors were “crossing the line”. plaintiffs counsel described mr. Spero’s questioning called it “annoying”.

that’s hardly mr. Musk’s only legal fight.

In the United States Court of Appeals for the Second Circuit, he is trying to terminate parts of the The agreement he reached with the SEC On this appeal, Mr. Musk argues that settlement provisions that prevent his ability to make public statements about certain Tesla matters intrude on his First Amendment rights.

And in the court of Delaware Chancery, a Tesla shareholder tries to invalidate Huge compensation package awarded to mr. Musk in 2018. A Delaware judge could announce a ruling in the coming weeks.