‘BAD WORD CHOICE’
Tesla shareholders claimed Musk misled them when he tweeted on Aug 7, 2018, that he was considering taking the company private at US$420 per share, a premium of about 23 per cent to the prior day’s close, and had “funding secured”.
They say Musk lied when he tweeted later that day that “investor support is confirmed”.
The stock price soared after the tweets and then fell again after Aug 17, 2018, as it became clear the buyout would not happen.
Porritt during closing arguments said the billionaire CEO is not above the law, and should be held liable for the tweets.
“This case ultimately is about whether rules that apply to everyone else should also apply to Elon Musk,” he said.
Musk’s lawyer Alex Spiro countered that Musk’s “funding secured” tweet was “technically inaccurate” but that investors only cared that Musk was considering a buyout.
“The whole case is built on bad word choice,” he said. “Who cares about bad word choice?”
“Just because it’s a bad tweet doesn’t make it fraud,” Spiro said during closing arguments.
An economist hired by the shareholders had calculated investor losses as high as US$12 billion.
During the three-week trial, Musk spent nearly nine hours on the witness stand, telling jurors he believed the tweets were truthful. He said he had lined up the necessary financing, including a verbal commitment from Saudi Arabia’s sovereign wealth fund, the Public Investment Fund. The fund later backpedalled on its commitment, Musk said.
Musk later testified that he believed he could have sold enough shares of his rocket company SpaceX to fund a buyout, and “felt funding was secured” with SpaceX stock alone.
Musk testified that he made the tweets in order to put small shareholders on the same footing as large investors who knew about the deal. But he acknowledged he lacked formal commitments from the Saudi fund and other potential backers.
The verdict is another victory for Musk and his lawyer Spiro after they won a defamation lawsuit against the billionaire in 2019 over his tweet calling a cave explorer a “pedo guy”.
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