More than four years after he tweeted that he intended to delist Tesla, Elon Musk must answer in court by investors hurt by his statements after already incurring the wrath of the authorities.
“Tesla’s then-CEO Elon Musk lied, and his lies caused people to lose millions of dollars,” said Nicholas Porritt, an attorney for the plaintiffs.
On August 10, 2018, they filed a complaint against the business executive for “artificially manipulating Tesla’s stock price to the utter detriment of investors” who were betting on a price drop.
The fraud trial opened Tuesday in San Francisco with the selection of a nine-person jury and is expected to last three weeks. Elon Musk himself should probably take the stand as early as Friday.
He created a frenzy by announcing on August 7, 2018, that he wanted to take his group public for $420 a share, then saying the financing was “secured.”
A few days later, he announced that he was in discussions with Saudi Arabia’s sovereign wealth fund in particular.
According to the defense, Elon Musk intended to delist Tesla and had no doubts about financing thanks to guarantees from this fund.
The billionaire’s lawyer, Alexander Spiro, admitted that his client wrote the tweet “in haste” after it was revealed in the Financial Times that a Saudi fund had invested in Tesla.
The choice of words was “reckless,” but “it’s not fraud,” the lawyer rapped.
“During this entire process, Mr. Musk did not sell a single share. No Tesla executive, no board member has ever sold a single share. In cases of real fraud, people (…) want to take advantage of it,” he insisted.
The electric car maker’s stock rose to $386.48 after the tweets. On August 16, it fell to $335.45.
On that date, the New York Times published an interview with Elon Musk that “confirmed the worst rumours,” Nicholas Porritt said, specifically that “no one on the board reread the tweets he wrote from his car. The trip to the airport and the price of $420 was a joke.”
In the US, the numbers 4 and 20 together are associated with cannabis consumption. When the billionaire proposed to buy Twitter last spring, he chose a price of $54.20 per share.
“I can tell you this is no joke for investors,” said Nicholas Porritt.
Lead plaintiff Glen Littleton told jurors how Elon Musk’s sensational revelation nearly “destroyed” all of his investments.
According to his lawyer, the case is also important because it concerns the laws governing financial markets – particularly those that depend on pension funds and insurance companies.
“Talented but forbidden”
Tesla quickly abandoned the idea of delisting.
But the American stock exchange police, the SEC, believing that he did not provide evidence of his financing, forced him to resign from the chairmanship of the board of directors, pay a fine of $ 20 million and demanded that tweets directly related to Tesla’s activities be pre-approved by an authorized lawyer.
“Elon Musk sees this lawsuit as a way to reconsider this decision by the SEC,” said Josh White, a former economist at the federal agency. “He thinks he did nothing wrong and has the right to say whatever he wants on Twitter.”
The government intervention didn’t dampen his appetite for provocation on his beloved social network, which he bought in October after months of twists and turns and threats of a lawsuit.
Since then, his controversial decisions at the top of the platform have drawn outrage almost daily, so much so that his lawyers last week asked a California judge to move the trial to Texas, fearing the jury in San Francisco might be biased.
The motion was denied, but comments from potential jurors read in court Tuesday revealed just how divisive the multibillionaire is.
Some described him as a “successful pioneer”, others as “arrogant, unpredictable and sometimes irrational” or “talented but crazy”.