Elon Musk was back in federal court Tuesday to defend himself against a class action lawsuit alleging he misled Tesla shareholders by tweeting about an abandoned buyout. The billionaire insists that he could have done it, if he wanted.
After three hours of testimony, Musk was excused by U.S. district Judge Edward Chen. Musk, 51, is unlikely to be called back to the witness booth during a civil trial that will be handed over to a jury of nine in February.
Musk, who is also the owner of Twitter and continues to lead Tesla, spent Tuesday describing himself to Alex Spiro, his attorney, as an immaculately trustworthy business leader capable to raise as much money as he needs in order to achieve his goals. He sparred with Nicholas Porritt, a shareholder lawyer who had earlier raised his fury during the trial.
Under Spiro’s gentle prompting, Musk made no secret of his contempt for Porritt at two different junctures on Tuesday. He also made a comment expressing doubts that the lawyer was protecting the interests of Tesla shareholders. These remarks were quickly rebuked by the judge and were removed from the record. Chen once rebuked Musk and said, “It’s not appropriate.”
Musk deliberately turned his attention away from Porritt when he was being challenged and looked directly at the jurors seated a few feet behind him. Musk also asserted that Porritt’s question about whether he has ever caused investors losses was “falsehoods”
Spiro also misunderstoodly addressed Musk as “your honour” when he asked the billionaire how much he made for investors over his career. This mistake elicited some humor in the San Francisco courtroom, which was packed with media and other observers who were there to hear Musk’s speech. Musk has been even more well-known since his October purchase of Twitter for $44 billion.
The trial is about whether Musk’s Aug. 7 tweets, which he posted on Twitter, caused damage to Tesla shareholders over a 10-day period that preceded his admission that the buyout he envisioned was not going to occur. Musk and Tesla reached the $40 million settlement after their statements, without admitting any wrongdoing.
Musk said “funding secured” in the first of his 2018 tweets. This would have been for a $72billion (or $420 per share) buyout of Tesla. At the time, the electric carmaker was still struggling with production issues and its value was far lower than it is today. Musk responded with another tweet a few hours later, suggesting that a deal was imminent.
Musk stated that Tesla would be publicly available for a few more weeks after those tweets. Musk and Tesla agreed to a $40 million settlement in the wake of misleading tweets.
Musk previously claimed that he entered into the settlement as a result of being forced to and that he believed he had enough money to make a deal.
Musk spent Tuesday trying to convince jurors that there wasn’t anything devious about two tweets suggesting he had secured the money to buy Tesla private. Tesla was in production difficulties and the company was worth less than it was now. The judge has already declared that the jurors are allowed to consider those tweets false. They will then have to decide if Musk intentionally deceived investors or if his statements caused them losses.
Musk, who was being guided by Spiro during his testimony before jurors, said that he only stated that he was considering a Tesla buyout, but had never promised to make a deal. Musk stated that he believed it was important to inform investors that Tesla may be ending its eight-year tenure as a publicly traded company.
“I had no ill motive,” Musk said. Musk stated, “My intention was to do what was right for all shareholders.”
While being quizzed by Porritt the day before, Musk was sometimes aggressive, indignant, and frustrated. Musk maintained that he secured financial backing to finance what would have been a $72 Billion buyout of Tesla at 2018 meetings with representatives of Saudi Arabia’s Public Investment Fund. However, no price or amount was discussed.
Musk claimed that the texts and emails indicating that the representative of the Saudi fund had not pledged the money to buy Tesla’s full stock were just words from someone trying to backtrack on a private pledge.
Shortly after Porritt resumed his questioning Tuesday evening, Musk laughed again at the idea that his belief in Saudi financial backing was not enough to allow him to tweet about a possible Tesla buyout.
Musk stated, “We are referring to the kingdom of Saudi Arabia.” They can buy Tesla multiple times. They didn’t have to spend a lot of money.
Musk reiterated his earlier testimony, saying that he could finance a Tesla purchaseout by sharing some holdings in SpaceX (a privately-held maker of rocket ships), which he also founded. This would be similar in nature to his Twitter purchase which saw him sell approximately $23 billion worth of Tesla stock.
Musk stated Tuesday that he did not want to do that, but it was something that showed that he could make large purchases and negotiate high-end deals. Tesla shareholders are not happy with Musk’s ownership over Twitter. They worry that he will be distracted by the increasing competition. Tesla’s stock value has fallen by about one-third since Musk took control of Twitter.
The stock’s value is seven times higher than it was at the time Musk sent his 2018 tweets. This includes adjusting for the two splits that occurred since then. Musk was able to remind jurors Tuesday of the fact that Tesla stockholders in August 2018 would have done extremely well if they had just kept the stock.
Musk stated that it would have been the most profitable investment on the stock market.
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