Tesla Co-Founder Elon Musk Cleared of Wrongdoing in Buyout Tweet Lawsuit
Elon Musk, Tesla co-founder, has been cleared of any wrongdoing related to a tweet he made in August 2018 about taking Tesla back into private ownership with “funding secured.” Shareholders claimed that the tweet misled them and caused billions of dollars in losses. However, the proposed $72bn buyout never materialized.
Verdict Reached in Class-Action Lawsuit
The verdict was reached by a nine-member jury in less than two hours during a class-action lawsuit brought forth by shareholders. Elon Musk expressed his gratitude for the verdict on Twitter, thanking the “wisdom of the people.” The lawsuit centered around a tweet made by Elon Musk on August 7, 2018, which stated his consideration of taking Tesla private at $420 with funding secured. The plaintiffs argued that Elon lied with the tweet and later tweets of “investor support confirmed.”
SEC Settlement
The stock price of Tesla surged after the tweets but fell back as the deal did not go through. The US Securities and Exchange Commission (SEC) sued Elon Musk over the tweets, accusing him of lying to investors. Elon Musk agreed to step aside as Tesla board chairman and settled with the SEC for $20m.
Elon Musk’s Defense
During the three-week trial, Elon Musk argued that he thought he had a verbal agreement from Saudi Arabia’s sovereign wealth fund for the buyout. During his nearly nine hours on the witness stand, he stated that “Just because I tweet something does not mean people believe it or will act accordingly.” Elon was not present in court when the verdict was read but was present during closing arguments.
Disappointing Verdict for Shareholders
Nicholas Porritt, a lawyer for the shareholders, stated that “rules should apply to Elon Musk like everyone else.” The shareholders’ attorney was disappointed with the verdict and is considering next steps. Securities fraud lawyer Reed Kathrein called the tweet about taking Tesla private “as concrete a statement of taking a company private as there can be” and said the not guilty verdict was “a travesty to investors and the securities laws.”
Conclusion
Elon Musk has been cleared of wrongdoing related to a tweet he made in August 2018 about a potential buyout of Tesla. The proposed buyout never happened, and the SEC sued Elon Musk over the tweets, accusing him of lying to investors. Elon Musk settled with the SEC for $20m by stepping down as Tesla board chairman. The verdict in the class-action lawsuit brought forth by shareholders was reached in less than two hours and cleared Elon Musk of any wrongdoing.
