About two and a half of the hundred pages in the official annual report of Tesla, which was published this Monday, are devoted to the topic of legal risks. If you are interested in more than the latest financial and business figures, including now $ 2 billion Bitcoin market value and almost 100,000 employees, you will also find what you are looking for in the stock exchange document called 10-K. So it can be inferred from him that older lawsuits against Tesla continue to smolder. In addition, in 2021 it turned out that two new procedures are under threat. One of them concerns an old conflict between Tesla CEO Elon Musk and the Securities and Exchange Commission (SEC) – which has stopped another investigation.
Musk tweets with lots of reenactments
Since 2016, several shareholders have been suing Tesla and, within the management, only Musk (see photo above), because he was the only one who did not agree to a settlement, because of the takeover of the photovoltaic company Solarcity. The latest update here was that in mid-January, the plaintiffs reclaimed Tesla shares from Musk in today’s value of $ 13 billion. The court’s decision is expected by the middle of the year, it is now said in the report. In addition, two older lawsuits continue over compensation for Musk and other board members. According to Tesla, negotiations on the first one will take place from mid-April.
Even before the 10K release, the last time I read several times was about the legal reenactments of a possibly ill-considered Twitter message from Musk in August 2018. At that time, he wrote that he was thinking about buying Tesla off the stock exchange and that he had already secured the financing for it. In a settlement with the SEC, he later admitted no wrongdoing, but gave up the post as chairman of the board at Tesla and paid $ 40 million. In this context, on the one hand, the investment bank JPMorgan is demanding a $ 162 million additional payment for a derivatives business – in the process, Musk recently said that the tweet was “completely true”.
In addition, there is also a class action lawsuit from Tesla shareholders, which, according to the new information, is scheduled to be heard in May. And the SEC is apparently not satisfied with the fact that the CEO apparently simply ignores part of the comparison with her about the incident. Actually, he would have to have certain Twitter messages about Tesla numbers and products legally checked beforehand. Already in July 2020, according to a report, the securities and Exchange Commission had complained of suspected Musk violations of the regulation, but more or less flashed off with it. But she does not let up: according to the annual report, in November 2021 she sent Tesla an official request (subpoena) to provide information on how to handle Twitter control over the CEO.
Old Tesla lawsuits are running, new ones are looming
If it turns out that Musk does not comply with the agreement, the SEC should not hesitate to sue him for it – especially since he has already publicly told the authority that he has no respect for them. That would be an additional process in the growing list of significant ones according to the Tesla report. The California Department of Fair Employment and Housing has informed the company that it sees reason for a civil lawsuit for racial discrimination and harassment against Tesla as an employer. A lawsuit recently made headlines here in which an ex-employee was awarded $ 137 million for racist insults. Tesla will appeal if necessary, the report says.
But not all Tesla processes run forever or entail more. At the end of 2019, the SEC requested financial data and contracts for financing agreements, among other things, by subpoena. At the end of 2021, the authority was informed that this investigation had ended, Tesla reports now. In addition, the US Department of Justice had previously requested and received information on a voluntary basis about the stock market withdrawal and the production of the Model 3. However, since the last delivery in May 2019, there have been no further inquiries in this matter.
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