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Tesla sued by JPMorgan in a warrant dispute worth $162 million

JPMorgan Chase & Co. was sued Tesla Inc. is seeking a settlement of $162 million in connection with a series of stock warrant transactions affected by Elon MuskThe brief attempt to take over the privately held carmaker three years ago.

America’s largest bank purchased warrants from Tesla in 2014 to help the automaker reduce the risk that its shares would be diluted by issuing convertible notes and to make some payments. federal income tax withholding, according to a complaint filed Monday in Manhattan federal court. When the warrants expire, Tesla will owe JPMorgan a payment in stock or cash if its shares trade above a certain actual price.

JPMorgan states it reserves the right to adjust strike prices in its sole discretion based on factors including the volatility of Tesla stock. The bank made two amendments in August 2018 – one after Musk tweeted that he had secured funding to take Tesla private, and another when the chief executive abandoned the effort several times. the following week.

Now that the warrants have expired, JPMorgan claims Tesla has shorted the amount due for the bank.

“While JPMorgan’s accommodations were appropriate and contractually required, Tesla refused to settle at the contract price and pay in full what it owed JPMorgan,” the bank said in the complaint. complaint.

Tesla wrote to JPMorgan in February 2019 to argue that the adjustments the bank had made six months earlier were “unreasonably swift and represent an opportunistic attempt to capitalize on changes in financial performance.” volatility in Tesla’s stock,” according to the complaint.

But JPMorgan claims Tesla has not presented specific challenges to the calculate or support its claim, and have not objected further in the past two years. Tesla did not respond to a request for comment on the lawsuit.

This dispute constitutes one of Musk’s most controversial periods. The US Securities and Exchange Commission sued the CEO and Tesla in September 2018, alleging that Musk engaged in securities fraud and that the company lacked adequate control over his social media activity. .

Musk and Tesla each agreed to pay $20 million for a settlement without admitting wrongdoing. The CEO was forced to step down from his role as chairman of the board for three years, and Tesla agreed to have an attorney pre-approval of important information Musk wanted to convey to investors.

The controls have not stopped Musk from causing controversy on Twitter. Earlier this month, he polled users on whether he should sell his 10% stake in Tesla. Since then, he has sold off about $7.8 billion of the company’s stock, leading to a stock sell-off.

The suit is JPMorgan Chase v. Tesla Inc., 21-cv-09441, United States District Court, Southern District of New York (Manhattan).

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