Elon Musk leaves the court where the trial for his Tesla tweets took place on January 24. Benjamin Fanjoy (AP)
Elon Musk is gaining the pulse of Tesla investors. The jury ruled this Friday that the tycoon didn’t break the regulator’s laws when he tweeted in August 2018 that he was considering taking the electric-car maker public and paying $420 a share, an amount that… also a reference to marijuana. That message, posted on the social network he now owns, gave him countless headaches and he must have agreed to a $20 million fine with the boss. The final point in the case came this morning in a San Francisco court with its victory in a class action lawsuit initiated by investors seeking multimillion-dollar damages.
The nine judges, who deliberated for just an hour, believe investors couldn’t describe the damage Musk, the company’s then-president and CEO, had done to them in just two words: “funding secured.” Then the businessman explained on the social network that his plan has the support of investors and he is just waiting for the vote of shareholders. He also explained in an email sent to employees what he hoped to achieve by privatizing the company. The vote didn’t come and the stock fell, prompting an investigation by the Securities and Exchange Commission, the SEC. It also cost Musk the company presidency.
Edward Chen, the judge on the case, had previously pointed out that Musk’s announcement in the tweet was false, calling the businessman’s behavior reckless when he pitched his idea to an account followed by tens of millions of people. This afternoon, Musk thanked the social network for the outcome in court. “Thank God the wisdom of the people prevailed,” he wrote.
Thank God human wisdom prevailed!
I am deeply grateful for the jury’s unanimous finding of innocence in the Tesla 420 privatization case.
— Elon Musk (@elonmusk) February 3, 2023
During the trial, which lasted a little under two weeks, Musk and his attorneys focused on verifying that the maneuver was not a scam and that he has never had a setback in raising rounds of funding. “It’s not a problem for me to raise money. I’ve done a good job for the investors and when you do it, they give you money,” Musk said Jan. 24 while sitting on the bench when questioned by his attorney. His defense produced a letter from a Goldman Sachs banker endorsing Musk’s plans and showing the investment bank’s willingness to support the deal.
The entrepreneur also argued that the Saudi sovereign wealth fund, one of the negotiating partners, is interested in being part of the deal with an investment of between 3% and 5% from Tesla. Musk explained that he was also exploring other ways to meet the amount needed. Including a sale of titles from another of his companies, SpaceX.
A jury member told the investors’ lawyers Friday that they were having trouble following the arguments in court. “There was nothing that was a revelation to me… Elon Musk is someone who can sneeze and the stock market would react,” said one of the members who passed the verdict.
Musk testified for three days. At one of these conferences, he reiterated that the process gave him the opportunity to explain his intentions and avoid the misunderstandings caused by his tweet, which caused a great deal of controversy four years ago. “I did my best to keep my shareholders informed and to make sure they had the same information,” Musk told the jury, which consisted of seven men and two women. Alex Spiro, one of the defense attorneys, assured the court that the arrangement failed because, in the end, “the interests of the shareholders to do the right thing prevailed.”
Initially, his legal team attempted to move the case out of San Francisco, where his number for the San Franciscos who would form the jury could be controversial. The lawyers wanted to take him to Texas, where the company is based today. This task failed. This Friday, it became clear that Musk’s image, however controversial, remains strong in the city that is the cradle of technology.
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