DETROIT (AP) — A group of Tesla shareholders suing CEO Elon Musk over some 2018 tweets about the company’s privatization are asking a federal judge to order Musk to stop commenting on the case.
Attorneys for the Austin, Texas-based company’s shareholders also say in court documents that the judge in the case ruled that Musk’s tweets about “secured funding” to take Tesla private were false and that his comments also went against one 2018 court settlement violated US securities regulators in which Musk and Tesla each agreed $20 million in penalties.
Musk said during an interview Thursday at the TED 2022 conference that he has the funding to take Tesla private in 2018. Calling the Securities and Exchange Commission a profane name, he said he only settled because bankers told him they would stop providing capital if he didn’t, and Tesla would go bankrupt.
The interview and court case came just days after Musk, the world’s richest person, made a controversial bid to take over Twitter and turn it into a private company with an offer of $43 billion, which was $54.20 -equivalent to dollars per share. Twitter’s board of directors on Friday enacted a “poison pill” strategy that would make it prohibitively expensive for Musk to buy the shares.
In court documents filed Friday, attorneys for Tesla shareholders alleged that Musk was trying to sway potential jurors in the lawsuit. They claim that Musk’s 2018 tweets about having the money to take Tesla privately at $420 per share were written to manipulate the stock price and cost shareholders money.
Now lawyers say Musk is committed to influencing potential jurors as the trial nears.
“Musk’s comments risk confusing potential jurors with the misrepresentation that he did not knowingly misrepresent his tweets dated August 7, 2018,” the attorneys wrote. “His current statements on the subject, an unsubtle attempt to acquit himself of public opinion in court, will only adversely affect a jury.”
The attorneys urged Judge Edward M. Chen in San Francisco to bar Musk from making any further public statements on the issue until after the trial. Chen gave Musk’s attorneys until Wednesday to respond.
Alex Spiro, an attorney representing Musk, wrote in an email Sunday that plaintiffs’ attorneys are seeking a large payout. “Nothing will ever change the truth that Elon Musk considered taking Tesla private and could have done so,” he wrote. “All that remains half a decade later are indiscriminate plaintiffs’ attorneys trying to make money and others trying to prevent this truth from getting out, all to the detriment of freedom of speech.”
But the shareholders’ attorneys wrote that Chen had already ruled that Musk’s tweets were false and misleading and “that no reasonable jury could conclude otherwise.”
Judge Chen’s order, issued on April 1, was not in public court filings as of Sunday. Adam Apton, a shareholders’ attorney, said it was sealed because it had evidence Musk and Tesla said is confidential. It will remain sealed until the parties agree on whether something should remain sealed, he wrote in an email. “Our request for TRO (preliminary restraining order) accurately describes the issues decided by the court,” Apton wrote.
Following Musk’s 2018 tweets, the SEC filed a complaint against him for alleged securities law violations. Musk then agreed to the fine and signed the court agreement. Part of the agreement states that Musk “will not take any action or make or permit any public statement that directly or indirectly disputes any allegation in the complaint or creates the impression that the complaint is unfounded.”
If Musk violates the agreement, the SEC can ask the court to abolish it and reinstate the securities fraud claim, the agreement said. A message was left Sunday asking the SEC for comment.
Spiro has already asked a federal court in Manhattan to overturn the agreement on Musk’s behalf. He claims the SEC is using the pact and “almost unlimited resources” to cool down Musk’s speech. Court documents filed by Spiro say Musk signed the agreement when Tesla was a less mature company and the SEC’s actions threatened its funding.