Apr 20 – Elon Musk will not be faced with a ‘gag order’ preventing him from discussing a lawsuit alleging he defrauded Tesla Inc. (TSLA.O) shareholders by tweeted in 2018 about the privatization of his electric car company, a federal judge ruled on Wednesday.
US District Judge Edward Chen in San Francisco agreed with Musk and Tesla that the proposed restraining order seemed excessive because it prevented Musk from speaking to “anyone” about the case.
Chen also found no evidence that public speaking by Musk, according to Forbes the richest person in the world, posed a “clear and present danger” or “serious and imminent threat” to a trial.
But the judge also said he plans to tell the jury at the scheduled January 2023 trial that he has already ruled that Musk’s tweets were false and did so with sufficient knowledge that they were false.
Shareholders are suing for losses due to Tesla stock volatility after Musk tweeted on Aug. 7, 2018 that he had “secured funding” to potentially take Tesla private for $420 per share and that “investor support is confirmed”.
Nicholas Porritt, a shareholders’ attorney, said in an email that he was pleased the jury was being instructed that the tweets “were false and fraudulently created by Elon Musk.” He said the primary remaining issue was the amount of damages owed.
Musk and Tesla’s attorneys did not immediately respond to requests for comment.
The April 15 gag request came a day after Musk revealed at the TED conference in Vancouver that he had provided funds to privatize Tesla, but the U.S. Securities and Exchange Commission still sued him for fraud because of his tweet. Continue reading
Musk and Tesla said the proposed gag arrangement “invokes a level of censorship” that is inconsistent with the US Constitution’s guarantee of free speech.
They also said an order could prevent Musk from communicating with Tesla shareholders, discussing his proposal to buy Twitter Inc. (TWTR.N) and attempting to finalize his consent decree with the SEC, which Tesla- Lawyers asked to review some of his tweets.
Musk has said he would never lie to shareholders. He has offered to buy Twitter for $54.20 per share.
The case is In re Tesla Inc Securities Litigation, U.S. District Court, Northern District of California, No. 18-04865.
Reporting by Jonathan Stamp in New York; Additional reporting by Hyunjoo Jin in San Francisco; Editing by Will Dunham, Bernard Orr