More than four years after he tweeted that he was going to take Tesla public, Elon Musk is now facing court action from investors who have been offended by his statements, having already faced the wrath of authorities.
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“Elon Musk (then) CEO of Tesla lied, and his lies have caused people to lose millions of dollars,” said Nicholas Porritt, attorney for the plaintiffs, investors brought together in a class action lawsuit.
On August 10, 2018, they filed a complaint against the CEO for “artificially manipulating the price of Tesla stock to completely ruin investors” who had bet on the stock price drop.
The fraud trial opened Tuesday in San Francisco with the selection of a nine-person jury and is expected to last three weeks. Elon Musk is on the witness list.
He caused a stir on August 7, 2018 when he said he wanted to delist his group when the stock hit $420.
He added that funding to carry out this operation was “secure” and indicated a few days later that he was in particular in discussions with the Saudi sovereign wealth fund.
The electric car maker’s stock had soared to $386.48. By Aug. 16, it had dropped to $335.45, according to figures presented to the jury by Judge Edward Chen on Tuesday.
“The plaintiffs intend to prove that the defendants made false or misleading statements that caused them harm and that they suffered losses during this period,” the judge said.
In addition to Elon Musk, Tesla as a legal entity and the members of the manufacturer’s board of directors are also involved in these proceedings at the relevant time.
For four and a half years, Elon Musk has never stopped explaining himself on that famous tweet.
Tesla quickly gave up the idea of delisting, but the SEC filed a complaint, believing the boss had failed to prove his funding.
“These misleading claims significantly disrupted the market within minutes of the tweet,” hurting investors, the SEC’s Steven Peikin said at a news conference.
The regulator had ordered Elon Musk to step down as Tesla CEO, pay a $20 million fine, and then demand that his tweets directly related to Tesla’s business be pre-approved by a competent attorney.
The multi-billionaire tried again in the spring to invalidate this decision, in vain.
But the authorities’ intervention didn’t dampen his appetite for provocation on Twitter, his favorite social network, which he bought in October after months of twists and turns and under threat of a lawsuit.
Since then, his controversial decisions at the top of the platform have sparked almost daily outrage, to the point that his attorneys last week asked the California judge to move the trial to Texas.
They fear their client might not benefit from an impartial trial in San Francisco, where Twitter is headquartered and where they say local media has “multiplied biased and negative articles about Mr. Musk.”
On Tuesday, the judge and attorneys from both sides polled potential jury members for their responses to a preliminary questionnaire, including their opinion of Elon Musk.
“They say: ‘He’s too bad’ (…) What do you mean by that?” the judge asked a woman, for example.
The businessman has also been described as “arrogant, unpredictable and sometimes irrational” by one or “gifted but crazy” by another.
Others see him as an “aspiring businessman” or a “successful pioneer”.
Alex Spiro, Elon Musk’s attorney, insisted on Tuesday not mentioning “recent events on Twitter” and urged future jurors to keep an “open mind.”
In a previous ruling on the case, the judge felt the famous 2018 tweet could be considered “false and misleading.”