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breaking news Tesla’s Elon Musk Found Not Liable in 2018 ‘Secure Funding’ Tweets Lawsuit

Tesla shareholders claimed CEO Elon Musk misled them when he tweeted on Aug. 7, 2018, that he was considering taking the company private at $420 per share, a roughly 23% premium to the closing the day before, and that it had “secure funding”. A U.S. jury on Friday said Musk was not responsible for misleading investors. Tesla shares rose 1.7% in after-hours trading following the verdict.

A US jury found on Friday that Tesla Inc CEO Elon Musk and his company were not responsible for misleading investors when Musk tweeted in 2018 that he had raised money to take the electric car company private. .

The plaintiffs had sought billions of dollars in damages and the ruling was also seen as significant for Musk himself, who has aggressively defended his ability to tweet widely.

The jury came back with a verdict about two hours after deliberations began. “The jury got it right,” Musk’s attorney, Alex Spiro, told reporters after the verdict. He declined to say more.

Musk was not present in court when the verdict was read. “We are disappointed with the verdict and are considering next steps,” Nicholas Porritt, attorney for the investors, said in a statement.

Tesla shares rose 1.7% in after-hours trading following the verdict.

“It’s clearly positive with the background noise suppression on Tesla from the 2018 tweet saga. A dark chapter is now closed for Musk and Tesla,” said Wedbush analyst Dan Ives. Some Tesla investors feared a loss by Musk would force him to sell more Tesla stock, he added.

The world’s second-richest person has already created legal and regulatory headaches with his sometimes impulsive use of Twitter, the social media company he bought for $44 billion in October.

Musk’s attention has been divided in recent months between Tesla, his rocket company SpaceX and now Twitter. Tesla investors have expressed concern that the company’s social media management takes up too much space.

Tesla shareholders claimed Musk misled them when he tweeted on Aug. 7, 2018, that he was considering taking the company private at $420 per share, a roughly 23% premium to the stock market close. day before, and that it had “secure funding”.

They say Musk lied when he tweeted later that day that “investor support confirmed.”

The stock price soared after the tweets, then fell again after August 17, 2018, as it became clear the buyout would not take place.

Porritt, during closing arguments, said the billionaire CEO was not above the law and should be held accountable for the tweets.

“This case is ultimately about whether the rules that apply to everyone should also apply to Elon Musk,” he said.

Spiro countered that Musk’s “Funding Secured” tweet was “technically inaccurate” but that investors only cared that Musk was considering a takeover.

“The whole thing hinges on a poor choice of words,” he said. “Who cares about the wrong choice of words? »

“Just because it’s a bad tweet doesn’t mean it’s a fraud,” Spiro said during closing arguments.

An economist hired by shareholders had calculated that investors’ losses amounted to $12 billion.

During the three-week trial, Musk spent nearly nine hours on the witness stand, telling jurors he believed the tweets were true. He said he secured the necessary funding, including a verbal commitment from Saudi Arabia’s sovereign wealth fund, the Public Investment Fund. The fund then backtracked on its commitment, Musk said.

Musk later said he believed he could have sold enough stock in his rocket company SpaceX to fund a buyout, and “felt the funding was secure” with SpaceX stock alone.

Musk testified that he made the tweets in order to put small shareholders on the same footing as big investors who were aware of the deal. But he acknowledged that he lacked formal commitments from the Saudi fund and other potential backers.

He said his tweets in general don’t always affect Tesla’s stock the way he hoped.

“Just because I tweet something doesn’t mean people believe it or will act on it,” Musk told the jury.


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