Mere months after walking out of one court case, Tesla CEO Elon Musk was plunged into another on Jan. 24.
He is now facing a lawsuit claiming that he lied to investors in a tweet in 2018, which claimed that funding was “secured” to take Tesla private.
‘Secured’ funding
Prior to the session on Tuesday, lawyers on both sides of the case argued over the legitimacy of the claims against Musk, Reuters reported. Nicholas Porritt, lead attorney for the investors, told the jury that Musk’s supposed lies led to the loss of millions of dollars by “regular people.”
On the other hand, an attorney for Musk, Alex Spiro, asserted that Musk used the “wrong words” when he made the tweet years ago. Musk’s lawyer also argued against Porritt’s statement, assuring that Musk was “serious” about taking Tesla private.
When Musk posted the tweet in question, Tesla stock soared, closing up 11 percent. However, it backfired when it was made clear that he wouldn’t go forward with the buyout, causing the loss of millions of dollars.
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As the trial commenced, Musk spent three days fighting against the lawsuit in San Francisco federal court, questioned by Spiro himself. On the stand, he was reportedly convinced that “funding was absolutely not an issue,” telling the nine-member jury that he could have taken finances from “several sources” for the go-private plan.
These sources ranged from shareholders like Oracle Corp co-founder Larry Ellison to Saudi Arabia’s own sovereign wealth fund — the Public Investment Fund — which Musk was sure would help him afford to take Tesla private. Unfortunately for Musk, the representatives of the fund backed out from the deal. Said representatives have not commented on the development.
When questioned by Spiro, Musk affirmed that he posted the 2018 tweet to let his investors know of his interest in taking Tesla private.
“I was trying my best to keep shareholders informed and ensure that all shareholders had the same information,” Musk said, according to the Wall Street Journal.
“I had no ill motive,” he added. “My intent here was to do the right thing for shareholders.”
Musk then told the jury that he reversed the decision upon receiving feedback from shareholders.
“After talking to a number of investors, especially the smaller investors, they said they would prefer a Tesla that remained public and I felt it was important to be responsive to their wishes,” Musk argued.
However, when questioned further by Porritt, he did admit that he did not possess “binding agreements with investors.”
Glen Littleton, one of Musk’s investors and now lead plaintiff for his fellow investors, testified that he had to quickly attempt to “liquidate certain positions.”
“This represented a threat to my livelihood,” he said.
On Monday, Musk told the court that he had other ways to afford the deal by selling his stake at his aeronautical company, SpaceX.
The trial is expected to resume next week, where the jury will decide whether Musk indeed misled investors or not.
