Elon Musk expected strong financial backing when he tweeted that he would take Tesla private in 2018, but lacked concrete pledges from potential backers, according to statements he made on his third day of questioning in a San Francisco federal court.
Musk is accused of defrauding investors by inflating Tesla’s stock price by tweeting on Aug. 7, 2018 that he “secured funding” to privatize the electric carmaker.
The trial is examining whether the second richest person in the world can be held liable for his use of Twitter. Millions of dollars are at stake for shareholders who claim they suffered losses after Musk tweeted that “investor support for the deal was confirmed.”
Tesla’s stock price surged following Musk’s tweets and later fell when it became clear the acquisition would not happen.
Musk told the jury Tuesday that he could have drawn on multiple sources of funding to take Tesla private, from existing shareholders like Oracle Corp co-founder Larry Ellison to Saudi Arabia’s sovereign wealth funds or his own fortune.
“Funding was absolutely no problem,” Musk said. “It was just the opposite.”
However, Musk acknowledged that he had no binding agreements with investors, leaving it up to the jury to decide whether he misled shareholders.
A jury of nine will decide whether the Tesla CEO artificially inflated the company’s stock price by touting the prospects of the acquisition.
In response to questions from his attorney Alex Spiro, Musk said his tweet was intended to inform investors that he was interested in privatizing Tesla. Musk said he had already discussed his interest with Tesla’s board of directors and Saudi Arabia’s sovereign wealth fund, and he feared it would leak to the media.
“I had no bad motive,” he said. “My intention here was to do the right thing for shareholders.”
The Saudi fund did not immediately respond to a Portal request for comment.
Musk told the jury he decided to drop the idea of taking the company private after receiving feedback from shareholders.
“After speaking to a number of investors, particularly the smaller investors, they said they would prefer a Tesla that stays public, and I felt it was important to listen to their wishes,” Musk testified.
The jury was shown notes and documents from a board meeting in the days following the tweet in which Goldman Sachs, which was working with Musk on the proposed deal, indicated there would be more than enough funding to make the company private.
Goldman Sachs did not immediately respond to a request for comment.
But when questioned by Nicholas Porritt, a lawyer for the investors, Musk said he had no binding agreements on funding from any interested party.
Musk repeatedly resisted Porritt’s solicited “yes” or “no” answers to discussions of Saudi fund funding commitments, which at one point prompted the judge to help with the questioning.
“Was a specific number discussed?” asked the judge.
“No specific number,” Musk said.
On Monday, Musk said he could have funded the deal by selling his stake in SpaceX, the aerospace company where he is also chief executive officer. He also said he believed the Saudi fund had promised funding before they backed down.
The tweet has already resulted in a $40 million settlement with securities regulators.
After it emerged that the money was not in place to take Tesla privately, Musk resigned as Tesla chairman but remained CEO under the Securities and Exchange Commission settlement without admitting wrongdoing.
The trial is scheduled to continue through next week with testimony from Tesla board members and experts.
Portal contributed to this report