More than four years after tweeting that he was going to take Tesla out of the stock market, Elon Musk must be held accountable in court by investors who feel aggrieved by his statements, after having already suffered the wrath of the authorities.
“Elon Musk, (then) CEO of Tesla, lied, and his lies caused people to lose millions of dollars,” said Nicholas Porritt, attorney for the plaintiffs, investors brought together in a class action.
On August 10, 2018, they filed a complaint against the business executive for having “artificially manipulated the price of Tesla’s stock in order to completely ruin investors” who were betting on the 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 himself is due to take the stand, possibly as early as Friday.
He had created a stupor on August 7, 2018 by saying that he wanted to withdraw his group from the Stock Exchange by paying 420 dollars per share, then that the financing was “secured”.
A few days later he indicated that he was in discussion with the Saudi sovereign fund in particular.
According to the defense, Elon Musk had every intention of taking Tesla out of the stock market, and had no doubts about the financing, thanks to assurances from this fund.
Alexander Spiro, the billionaire’s lawyer, admitted that his client wrote the tweet “in a hurry” after a Financial Times article revealed that the Saudi fund had invested in Tesla.
– “Joke” –
The choice of words was “reckless”, but “it’s not a fraud”, hammered the lawyer.
“During this whole process, Mr. Musk has not sold a single share. No Tesla executive, no member of the board of directors has sold a single share. In real cases of fraud, people (.. .) want to take advantage of it,” he insisted.
The title of the electric car manufacturer had jumped up to 386.48 dollars in the wake of the tweets. By August 16, it was down to $335.45.
On that date, the New York Times had published an interview with Elon Musk “which confirmed the worst rumours”, argued Nicholas Porritt, in particular that “no one from the board of directors had reread the tweets composed from his car on the way for the airport, and that the price, $420, was a joke”.
In the United States, the numbers 4 and 20 together are associated with the consumption of cannabis. When the billionaire offered to buy Twitter last spring, he chose a price of $54.20 per share.
“I can tell you that it was no joke for investors,” said Nicholas Porritt.
Glen Littleton, the main plaintiff, told the jurors how the sensational announcement of Elon Musk had almost “annihilated” all his investments.
According to his lawyer, this case is also important because it concerns the respect of the laws which govern the financial markets – markets on which depend in particular the pension funds and insurance companies.
– “Gifted but barred” –
Tesla had quickly abandoned the idea of delisting.
But the American stock market policeman, the SEC, believing that the boss had not provided proof of his financing, had forced him to cede the presidency of the board of directors, to pay a fine of 20 million dollars and demanded by the following that his tweets directly related to the activity of Tesla are pre-approved by a competent lawyer.
“Elon Musk sees this lawsuit as a way to have this decision of the SEC reconsidered”, comments Josh White, former economist of the federal agency. “He thinks he did nothing wrong and he has the right to say what he wants on Twitter.”
The intervention of the authorities did not moderate his appetite for provocations on his favorite social network, which he bought in October after months of twists and turns and under the threat of a lawsuit.
Since then, his controversial decisions at the head of the platform have sparked outrage almost daily, to the point that his lawyers asked the California judge last week to move the trial to Texas, fearing that the jury was biased in San Francisco.
The motion was denied, but comments from potential jurors, read in court on Tuesday, revealed how divisive the multi-billionaire is.
Some described him as a “successful pioneer”, others as “arrogant, unpredictable and sometimes irrational” or “gifted but crazy”.