Elon Musk entered a lawsuit Friday in San Francisco alleging investor fraud for tweeting more than four years ago that he plans to take Tesla private.
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Dark suit, white shirt, he was sworn in earlier this afternoon for testimony that could continue on Monday.
The head of Tesla – and since the end of October also of Twitter – caused a stir on August 7, 2018 when he said he wanted to take his car company private at a price of $420 per share, after which the financing was ” secured”.
“Elon Musk, (then) CEO of Tesla, lied, and his lies have caused people to lose millions of dollars,” Nicholas Porritt, attorney for the plaintiffs, told investors gathering in a class action lawsuit Wednesday.
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Nicolas Porritt
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 tweet was written “hastily”, the choice of words was “ruthless”, but “it’s not a scam,” hammered Alexander Spiro, the billionaire’s lawyer.
He assured on Wednesday that Elon Musk intends to take Tesla private and has no doubts about the funding thanks to assurances from the Saudi sovereign wealth fund.
The operation was unsuccessful.
The billionaire’s proposal was “incomplete, incoherent and in certain respects illusory,” Guhan Subramanian, a Harvard professor and specialist in these types of transactions, said on Friday when asked to testify by the plaintiffs.
He pointed to the board’s lack of scrutiny over Elon Musk’s tweets, the “lack of consultation” with lawyers and bankers, and the “unilateral announcement” on Twitter to demonstrate how the Tesla CEO’s approach is “extremely” different from the usual process deviated .
One of the complainants, Timothy Fries, said he invested in Tesla the day after the famous tweets.
For him, the message “funding secured” means that Elon Musk “had a partner who committed and whose funds were approved”.
But the share price fell in the following days. “I lost $5,000. I hope to recoup my losses,” said Mr. Fries.
Tesla stock surged as high as $386.48 right after the tweets. As of Aug. 16, it had fallen to $335.45, a far cry from the $420 per share Musk mentioned, according to figures presented to the jury on Tuesday by Judge Edward Chen.
The process is expected to take three weeks. In a previous ruling on the case, the judge felt the famous 2018 tweet could be considered “false and misleading.”