Elon Musk is being sued by investors over false claims he made in 2018 about taking Tesla private, which caused wild gyrations in the electric carmaker’s stock price.
Elon Musk’s fraud trial over a series of tweets about his electric car firm Tesla began on Wednesday. Investors are suing the CEO over claims he crashed the company’s stock price by claiming he had secured financial backing to take the company private.
“We are here because Elon Musk, chairman and chief executive of Tesla, lied. His lies caused regular people like Glen Littleton to lose millions and millions of dollars,” said Nicholas Porritt, a lawyer representing Tesla shareholders in the class-action case. The first witness called to the stand was Littleton, a 71-year-old investor from Kansas City in Missouri. He lost 75% of his Tesla portfolio after Musk’s tweet alarmed him, triggering him to sell his stock at a significant loss.
Musk’s lawyer, Alex Spiro, instead touted his client as a visionary who wrote the tweet in a momentary decision to be transparent. “He didn’t plan to tweet this,” Spiro said.
In 2018, Musk wrote on Twitter that he had found buyers willing to buyout shareholders for $72 million. He then fired off a follow-up tweet that made the deal seem like a foregone conclusion.
This caused the value of Tesla to skyrocket and then abruptly stop climbing when it became apparent that he did not have the amount of funding he claimed. Investors say this cheated them out of “billions” after the company’s stock price became highly volatile after the news.
The incident also attracted the attention of US regulators, to whom Musk had to pay a $40 million fine and agree to step down as Tesla chairman.
Musk has maintained his innocence, saying that he believed he had enough money after meeting with members of Saudi Arabia’s public investment fund, and that he paid the fine under duress.
‘Off his rocker’
The nine-member jury at the California trial will largely be responsible for determining Musk’s motives in making the claims, which Judge Edward Chen has already decreed were false.
Lawyers for Musk attempted to have the trial moved, citing the difficulty in obtaining impartial observers in the San Francisco area, but were not successful. Some prospective jurors described Musk as “narcissistic,” “arrogant” and “off his rocker,” though others called him a “genius.”
The trial is also expected to shine some light on Musk’s management style, which has been in the headlines since he acquired Twitter in October 2022.
Employees have either been fired or quit in droves, describing incompetent leadership and the creation of a toxic atmosphere.
Tesla shareholders have complained that he could not possibly be giving the automaker the attention it needs by being CEO of two such big companies.
Although Musk has said he would step down as Twitter chief, he has yet to do so.
es/wmr (AP, Reuters)