Elon Musk is to start trial over a false tweet that said he will buy a controlling stake at Tesla.
In August 2018, the billionaire announced that he had secured financing for a $72-billion buyout of Tesla.
He then followed up with a statement that made it appear that the deal was going ahead.
However, the buyout didn’t happen, and Musk is now required to explain his conduct under oath in a San Francisco federal court.
The trial will start on Tuesday, January 17, and was sparked by a class-action suit on behalf of investors who bought Tesla stock for 10 days in August 2018.
Musk’s tweets at the time fueled a boom in Tesla’s stock price, which ended abruptly a week later when it became clear that Musk didn’t have the funding for a buyout.
As a result, he shelved his plan to take the company private.
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It concluded in a $40 million settlement with US securities authorities, and his exit as chairman of the automaker.
Musk has now claimed that he entered into the agreement under coercion.
He said financial support for a Tesla buyout was reached during discussions with representatives from Saudi Arabia’s Public Investment Fund.
The outcome of the trial may depend on the jury’s understanding of Musk’s motive for tweets that US District Judge Edward Chen has already ruled were false.
On Friday, January 13, Chen gave Musk another blow by rejecting his request to take the trial to a federal court in Texas, where Tesla moved its headquarters in 2021.
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Musk claimed the San Francisco jurors are biased against him due to negative media coverage about his Twitter takeover.
His Twitter management style of firing staff and alienating users and advertisers has made him unpopular among Tesla’s present stockholders.
They are concerned that he has been committing less time to manage the company during a period of increased competition.
As a result of his Twitter takeover, Tesla’s stock dropped 65 percent last year, wiping away more than $700 billion in shareholder wealth.
The complaint states that if Musk had not dangled the prospect of purchasing the firm for $420 per share, Tesla’s shares would not have traded at such a wide range.
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After Musk scrapped the plan of a Tesla buyout, the business overcome a production problem.
It led to a significant boost in car sales, causing its stock to skyrocket and establishing Musk as the world’s richest person until he purchased Twitter.
Musk lost the top spot on the wealth list following the stock market’s pushback to his stewardship of Twitter.
He was recently given a Guinness World Record for the most any person has ever lost in a year, around $182 billion.
Tesla’s current and former top executives and board members are among the witnesses in the trial.
It includes leading lights like Oracle co-founder Larry Ellison and James Murdoch, son of media magnate Rupert Murdoch.
Source: Los Angeles Times
