A lawyer for Tesla’s investors said that CEO Elon Musk “lied” when he said that funding had been “secured” to delist the company from the stock market, but Musk’s lawyer said the billionaire used only “wrong words” to express his plans in 2018.
Tesla investor Glenn Littleton is seeking damages on behalf of shareholders who traded in the company in the days after Musk posted his plan to delist the company on Twitter in August 2018.
Chief investor attorney Nicholas Porritt told a San Francisco jury during opening remarks that what he believed were Musk’s lies caused “ordinary people” to lose millions of dollars. “Millions of dollars were lost when his lies spread,” he added.
Alex Spyro, Musk’s lawyer, disputed that characterization, saying the billionaire was “serious” about delisting the company from the stock market in 2018, but eventually faced shareholder opposition.
“We will know very soon that this was not fraud, not even close to that,” Spyro said during his opening remarks. He added to the jury that Musk thought financing was not an issue and was “taking steps” to close a deal.
Spyro said that while the tweets contained “technical errors”, Musk was concerned that some investors knew of his plan to delist the company from the stock market and wanted to pass the information on to the “ordinary shareholder” who “wanted to protect him”. “He used the wrong words, in a hurry,” Spyro added.
A nine-member jury will decide whether the tweets artificially inflated Tesla’s share price by exaggerating the financing status of a deal, and if so, by how much.
Among the defendants are current and former Tesla executives, who Spyro said had “pure” motives in their response to Musk’s plan.
Today, Spyro considered that Tesla’s share price jumped in response to Musk saying that he was considering canceling the company’s listing on the stock market, which he said was true. He added that he did not jump on Musk’s assertion about the funding.
Shareholders file lawsuits every year against hundreds of companies and their executives for alleged securities fraud, but very few of these cases reach the trial stage. The vast majority are either rejected by the courts or are being settled.
