Why Elon Musk is being sued over 4 year old Twitter post

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A four-year-old tweet from Elon Musk brought the Tesla CEO back to court this week.

Musk, Tesla and other Tesla directors are facing a shareholder lawsuit over his now-infamous tweet from 2018, which said he was considering taking Tesla private at a price of $420 a share. Had he ended the tweet then and there, there would still be no coverage, nor a lawsuit seeking unspecified damages.

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But he concluded with two words that could now land Musk with millions of dollars in fines and legal fees: “Secured financing.”

It turned out that while Musk had spoken to Saudi sovereign wealth fund executives about the money he would need to take Tesla private, the funding was anything but “guaranteed.”

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Tesla shares initially rose 11% on the day of his original tweet, but never reached the promised level of $420, reaching a high that day of $387.46.

And they soon fell well below the pre-tweet price of $344, hitting $263.24 a month later when it became clear the funding was less than secure, leading to the shareholder lawsuit that is now coming to trial later. of more than four years.

A shift from losses to profits about a year after the tweet sent Tesla shares into an extraordinary run, gaining 1,520% from the day of the post to its record high in November 2021. That record close of $409.97 results in $6,150 a share, when adjusted for the two developments since that day.

Even with the 70% decline in Tesla stock from an all-time high through Friday’s close, the stock is still up 384% since its close on the day of the 2018 tweet.

Musk’s tweet also sparked a civil lawsuit by the Securities and Exchange Commission (SEC), the federal agency tasked with protecting investors by requiring executives to tell the truth.

It originally intended to remove him from his position as CEO of Tesla. Ultimately, he reached an agreement with Musk in which he and Tesla agreed to pay $20 million in fines, and Musk stepped down as chairman of the company but retained the title of CEO. He also demanded that any tweets he sent containing relevant information about Tesla be reviewed in advance by other company executives.

Later, Musk said he only agreed to the deal because continuing to fight would result in banks cutting off the funding Tesla needed to survive, which was losing money and facing a cash crunch. In remarks at a TED conference last year, he compared dealing with the SEC to someone holding a gun to your child’s head.

But despite his claims of having secured funding, Federal Judge Edward Chen, who is hearing the case that began this week, said in a decision last April that “no reasonable jury could consider Musk’s Aug. of 2018 accurate or not misleading” and rejected the request by Musk and other defendants that the case be dismissed before trial.

Last week, Chen also ruled against a motion by Musk and other defendants to move the case to Texas, where Tesla is now headquartered, rather than San Francisco.

They argued that the media attention on Musk and his buyout of Twitter made it impossible to find an impartial jury in the San Francisco Bay Area, particularly coverage of his firings on Twitter since the completion of the buyout and his views on allowing tweets that might have , has already been banned for spreading misinformation.

“It is unlikely that a prospective juror who already holds the opinion that Mr. Musk inappropriately uses Twitter or is not honest in the filing address this bias in his assessment of the evidence in this case and provide an unbiased verdict,” Musk’s attorneys argued. They said surveys of 200 potential jurors found that 116 already had a negative opinion of Musk and only 26 had a positive opinion of him.

“Juror questionnaires reinforce that the jury in this district is biased against Mr. Musk, that much of the prejudice is directly related to issues in this case (i.e., Mr. Musk’s use and honesty of Twitter) and that any previously existing baseline has been spurred and emphasized by media coverage of recent events” , their lawyers said in the lawsuit. “These numbers make it clear that an impartial juror cannot be excluded from this pool of jurors.”

During the selection process on Tuesday to choose the nine jury members, potential jurors were asked about their opinions of Musk that they had given in these questionnaires.

A potential juror wrote that Musk seems “arrogant and narcissistic”. But when asked by the judge if she believes she could put those feelings aside and render a verdict based solely on what is said in court, she replied: “Without a doubt.”

“A lot of people aren’t likeable, but that doesn’t mean you should judge them for that,” she said. “There are times when I don’t like my husband.”

This is just the latest lawsuit involving Musk. He is still awaiting a decision in a bench trial in a separate shareholder case held in Delaware state court contesting the compensation package he received from Tesla that made him the richest person on the planet until the recent decline in the company’s stock price. .

Source: CNN Brasil

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