Elon Musk Stands by 2018 Tweet Saying Tesla Was Going Private in New Court Filing
Tesla CEO Elon Musk, who said in 2018 that he planned to take the EV business private, maintained in a Feb. 1 court filing that his tweet was “entirely truthful” and that investors who claim the missive was fraudulent are wrong, Bloomberg reports.
“Am considering taking Tesla private at $420. Funding secured,” Musk tweeted in August of 2018. “Shareholders could either to sell at 420 or hold shares & go private.”
Lawyers for Musk expressed, via the filing, that Saudi Arabia’s sovereign wealth fund had indeed agreed to support his attempt to take the company private, according to Bloomberg.
“Elon Musk’s August 7, 2018 tweet informing the public that he was considering taking Tesla private was entirely truthful,” the CEO’s attorney, Alex Spiro, said in the filing, per Bloomberg. “Mr. Musk was considering taking Tesla private at $420 a share. Funding was secured. There was investor support.”
Following the 2018 tweets, the Securities and Exchange Commission (SEC) sued Musk, claiming, “Musk knew or was reckless in not knowing that each of these statements was false and/or misleading because he did not have an adequate basis in fact for his assertions. When he made these statements, Musk knew that he had never discussed a going-private transaction at $420 per share with any potential funding source, had done nothing to investigate whether it would be possible for all current investors to remain with Tesla as a private company via a ‘special purpose fund,’ and had not confirmed support of Tesla’s investors for a potential going private transaction,” per the relevant Sept. 2018 SEC filing.
He was ordered to pay $40 million in fines.
Peter Cohan, a senior lecturer at Babson College and author of “Goliath Strikes Back,” told GOBankingRates that “If Musk believed that funding was secured, wouldn’t it have been better to prove it by producing a signed contract from his Saudi investor than to pay $40 million in fines and be replaced as Tesla chairman?”
“It will be interesting to see whether Musk will provide the court with irrefutable evidence that funding was secured at $420 a share. I doubt it will happen,” Cohan added.
A class action lawsuit pertaining to the tweet has been filed in the U.S. District Court Northern District of California, and a jury trial is scheduled to begin on May 31, 2022, according to the lawsuit.
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