Tesla CEO Elon Musk is facing a trial in San Francisco on Tuesday, January 18th, brought by shareholders who claim he manipulated the share price of the company. The lawsuit stems from a tweet Musk sent in 2018, in which he stated he had “funding secured” to take the carmaker private in a $72bn buyout. However, the funding was not secured and Tesla was not taken private. Shareholders argue that they lost billions of dollars due to the tweet, after the share price plummeted.
Musk argues that he believed he had secured funding from Saudi Arabia’s Investment Fund and did not commit securities fraud. If the jury rules in favor of the shareholders, Musk may be ordered to pay billions of dollars in damages. He has already paid $20 million to the Securities Exchange Commission (SEC) for the August 7th, 2018 tweet, while Tesla had to pay another $20 million. As a result of the tweet, the SEC also removed Musk as chairman of Tesla.
Legal experts believe it will be a difficult case for Musk to win and that the fine he paid to the SEC will be used against him in the case. However, jury trials in cases of fraud are notoriously difficult to predict.
Musk had wanted the trial to be moved to Texas, arguing that a fair jury would not be possible to find in San Francisco. He stated that mass sackings at Twitter, a company he bought last year, affected many employees in San Francisco, and that he is not popular in the city. Musk’s team had argued that a significant majority of potential jurors said they viewed the billionaire negatively. However, the judge said the trial would go ahead in California.
The trial may see Musk give evidence under oath. The witness list also includes Oracle’s CEO Larry Ellison and media tycoon James Murdoch.