SAN FRANCISCO, Jan 20 (Portal) – Elon Musk, CEO of Tesla Inc. (TSLA.O), is expected to face a jury trial on Friday over his 2018 Twitter post that he “secured the funding” to take over the electric drive automaker privately, which has reportedly cost them millions in trading losses.
The class action lawsuit in San Francisco federal court resumed when investor Timothy Fries told the jury how he lost $5,000 buying Tesla stock after Musk sent the tweet at the center of the lawsuit.
Known for his hawkish statements, Musk is expected to address why he insisted he had Saudi investor support for the deal that never materialized and whether he knowingly made a materially misleading statement with his tweet has made.
The case is a rare securities class action lawsuit, and plaintiffs have already cleared steep legal hurdles, with US Judge Edward Chen ruling last year that Musk’s post was untrue and reckless.
Shareholders claimed Musk lied when he sent the tweet, costing investors.
Fries told the jury that for him, secured funding meant that “there have been some reviews, some critical reviews of these sources of funding.”
Musk’s attorney, Alex Spiro, told the jury in his opening statement on Wednesday that Musk believes he is being funded by Saudi donors and is taking steps to see the deal through. Fearing leaks to the media, Musk tried to protect the “ordinary shareholder” by sending out the tweet that contained “technical inaccuracies,” Spiro said.
Harvard Law School professor Guhan Subramanian told the jury that Musk’s behavior in 2018 lacked the hallmarks of traditional corporate accounts, tweeting his interest in Tesla without proper financial or legal analysis.
“It’s an extreme outlier compared to the default template,” said Subramanian, who called Musk’s approach “unprecedented” and “incoherent.”
A jury of nine will decide whether the tweet artificially inflated Tesla’s stock price by hyping the funding status for the deal, and if so, by how much.
The defendants include current and former Tesla directors, who Spiro said had “pure” motives in their response to Musk’s plan.
Reporting by Tom Hals in Wilmington, Delaware and Jody Godoy in San Francisco; Edited by Noeleen Walder, Peter Henderson, Matthew Lewis and Daniel Wallis
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