Elon Musk
Krisztian Bocsi | Bloomberg | beautiful pictures
In a court filing late Friday, shareholders are suing Tesla and executive director Elon Musk on securities fraud allegations said they won part of a key ruling in their class action lawsuit.
Shareholders are suing Tesla for money they lost after Musk tweeted in 2018 that he was considering taking his electric car company private for $420 a share and said he had guaranteed funding to do so.
Trading in Tesla’s stock initially halted, then the stock fluctuated wildly for weeks after the tweets. Musk later say that he has discussed with Saudi Arabia’s sovereign wealth fund and feels confident that funding will come at his proposed price. An agreement never materialized.
The Securities and Exchange Commission investigated and charged Musk with civil securities fraud as a result of those tweets. Tesla and Musk signed a revised settlement in 2019 over those allegations, but Musk is trying to end that settlement now.
Losses from the shareholders’ class action could run into the billions of dollars that Musk and Tesla will have to pay to those who are members of the class.
Attorneys for the shareholders said in their filing Friday that Judge Edward M. Chen, who is presiding over the matter, concluded that Musk acted with Scientist — in other words, that he knowingly made false statements about securing financial resources when he tweeted.
This information was disclosed in a request that the shareholders’ attorney provide an interim injunction against Musk to prevent him from making further public comments on aspects of this case, as he did. in a wide appearance at the event TED Conference 2022 on April 14.
The request for a temporary restraining order alludes to Judge Chen’s earlier ruling, which is currently being sealed because it addresses evidence Musk’s team considers confidential. “We anticipate the order to be announced soon,” Levi & Korsinsky’s Adam Apton, chief adviser to Tesla’s shareholder group, told CNBC by email.
At Thursday’s TED conference, Musk called financial regulators in the SEC’s San Francisco office “assholes.”
Musk also said, “The SEC knew that the funding was secured, but they were still pursuing an active, public investigation at the time. Tesla was in a precarious financial position. the banks said that if I didn’t agree to go to the SEC that they would, the banks would stop providing working capital and Tesla would go bankrupt immediately so that’s like having a gun to your head your child. I was unlawfully forced to give in to the SEC.”
It’s not clear why Musk feels he may not be able to get working capital for Tesla, but is confident he can muster the billions needed to take the company private all at once.
On paper, Musk is currently the richest man in the world and is trying to claim Twittersocial media platform of his choice, and keep it private for about $43 billion.
Musk’s attorney, Alex Spiro, a partner with Quinn Emanuel Urquhart & Sullivan, told CNBC: “Nothing will change the truth. Elon Musk is considering making Tesla private and possibly private. yes.” He added, “The plaintiffs’ attorneys are trying to make money and others are trying to prevent the truth from coming to light all of which are harmful to freedom of expression.”
Spiro issued a similar statement to Bloomberg, first reporting on the new developments in the shareholders’ class action.
The trial date is currently set for May 31, 2022, in a San Francisco federal court, but that could change.
Levi & Korsinsky’s Apton told CNBC, “We look forward to proving the rest of our case at trial and recovering damages on behalf of the class.”
