"Tesla Delisting" Musk's Tweet from 5 Years Ago, Ultimately Leading to Trial

[Asia Economy New York=Special Correspondent Joselgina] A two-sentence tweet posted by Elon Musk, CEO of Tesla, five years ago is finally leading to a securities fraud trial this week.

According to the Wall Street Journal (WSJ) and others on the 16th (local time), the trial over Musk CEO's securities fraud charges will begin with jury selection on the 17th at the San Francisco court in California and continue until the 1st of next month. This is the aftermath of Musk CEO's August 2018 tweet stating, "Considering taking Tesla private at $420 per share. Funding secured."

[Image source=Reuters Yonhap News]

At that time, the $420 per share mentioned in Musk CEO's tweet was about 20% higher than the market price. As investors flocked, Tesla's stock price soared. However, just three weeks later, Musk CEO retracted the tweet citing failure to secure funding, and the stock price also fell. Ultimately, Musk CEO, embroiled in stock price manipulation controversy, reached a settlement with the Securities and Exchange Commission (SEC), which had launched an investigation, on the condition of giving up the Tesla board chairman position, but could not prevent a class-action lawsuit for shareholder damages. Investor Glenn Littleton, who filed the lawsuit, criticized, "Musk CEO's tweet at the time was false and increased the volatility of Tesla's stock, options, and bond prices, causing billions of dollars in losses to investors."

The key issue in this lawsuit is the truthfulness of the tweet posted by Musk CEO. It hinges on whether Musk CEO tweeted to manipulate the stock price without the intention of taking the company private and whether the funding was actually secured. So far, Musk CEO has argued that he genuinely considered taking Tesla private at the time of the tweet and had received a funding commitment from the Saudi Arabian sovereign wealth fund, asserting that he did not intentionally deceive shareholders.

Jill Fish, a securities law professor at the University of Pennsylvania, said, "Securities fraud cases are usually resolved through settlements before trials begin, so this trial is unusual," and evaluated, "Musk CEO is facing a tough battle." Edward Chen, the judge at the San Francisco court handling the trial, had already made a preliminary ruling in April last year that Musk CEO's tweet about delisting was a false statement. Recently, Musk CEO requested the court to hold the trial in Texas, claiming that the San Francisco jury and local media are hostile toward him, but this was also rejected.

With Tesla's stock price plummeting last year, wiping out $200 billion (about 250 trillion won) of Musk CEO's wealth, this class-action lawsuit has put him in an even more difficult position. WSJ reported that arguments could begin on the same day as jury selection is completed. Besides Musk CEO, witnesses expected to appear include James Murdoch, son of media mogul Rupert Murdoch and Tesla director; Kimbal Musk, Musk CEO's brother and board member; and Larry Ellison, founder of Oracle.

This content was produced with the assistance of AI translation services.