Tesla CEO Elon Musk has defended his controversial 2018 tweets in court, which have led to a potentially costly investor lawsuit. He was honest at the time, Musk assured in San Francisco.
A class action lawsuit is being negotiated by investors over Musk’s hasty announcement that he wants to take the electric car manufacturer off the stock exchange. The plaintiffs accuse Musk of fraud that robbed them of money. After hours of questioning on Monday, he has to take the witness stand for the third time on Tuesday.
Specifically, two claims in Musk’s tweets take center stage. Not only did he write that he was considering taking Tesla private at a price of $420 per share. He also claimed that such a deal had “secured” funding and confirmed investor support. It later emerged that there were no written funding agreements and influential investors were in favor of staying on the stock exchange.
Judge Edward Chen ruled last year that the allegations in Musk’s tweets from early August 2018 were false. The jury will now decide whether Musk knowingly made false statements, whether they were relevant to the decisions of the plaintiff investors and whether they actually cost money. A defeat in the process can be expensive for Musk.
Musk reiterated on Monday that he actually believed he had the money to buy Tesla. For one thing, the State Investment Fund of Saudi Arabia had previously pledged its full support for such a deal. On the other hand, he himself had the necessary leeway to have enough money by selling shares in his space company SpaceX.
However, when questioned by the plaintiff’s attorney, Musk admitted that the Saudi investment fund only learned the proposed price of $420 per share from his tweets. The fund then also requested more details about the plan in writing, otherwise it would not be possible to decide whether to participate in the deal. Musk called it a “backtracking” from previous commitments.
He also admitted that he did not speak to investors other than the Saudi fund before briefing Tesla’s board of directors on his takeover plan. The plaintiff’s attorney saw this as contradicting the allegation of alleged approval from investors.
Musk also said he dropped the tweets out of concern that the Financial Times might reveal the intended deal. At the same time, he admitted that he did not know what exactly the newspaper knew – in fact, the newspaper only reported that the Saudi fund had acquired a stake in Tesla. The article made no mention of plans to withdraw from the stock exchange.
A slip of the tongue by the lawyer, who referred to Musk as “Mr. Tweet» addressed. That actually fits, replied the billionaire who bought Twitter in the fall.
Musk’s own lawyer helped him with his questions to present himself as a seasoned businessman. “I think I’ve raised more money from investors than anyone in history,” Musk claimed at one point.
The tweets had already caused serious trouble for Musk and Tesla. The 51-year-old and the company each paid fines of $20 million for misleading investors, according to the SEC’s investigation. In addition, Musk had to give up the chairmanship of the board of directors and undertake to have potentially price-sensitive tweets approved by Tesla.