Tesla-Investors accuse the company boss Elon Musk (51) Fraud, in the court case the billionaire himself has now been called to the witness stand and provided some insight into his line of defence. So he insisted that the currently limited length of 280 characters Twitter-messages don’t allow lengthy explanations.
The case relates to Musk’s August 2018 tweet rushing to announce that he intends to take the electric car company public and has secured funding to do so. Later it turned out that there were no firm commitments from investors. Investors are basing their class action lawsuit against Musk and Tesla’s board of directors on this. The false tweets triggered price swings that caused them to lose money, they argue.
However, Musk’s questioning by the plaintiff’s lawyer was brief on Friday: the court adjourned until Monday about half an hour after the start of the questioning. However, his lawyer had already said in the opening speech that the phrase “funding secured” was only due to an unfortunate choice of words under time pressure, while Musk meant something else. The lawyer for the plaintiffs reminded the Tesla boss in the survey that he also had to provide correct information about his company on Twitter.
Musk with memory lapses
At the same time, Musk tried to question the general impact of his tweets on investors. “Just because I tweet something doesn’t mean people will believe it or act on it,” he said when questioned. He once wrote on Twitter that he thought Tesla shares were too expensive – and the price continued to rise afterwards, Musk said. In fact, on the May 2020 day following Musk’s tweet, the stock had initially fallen over 10 percent before later rebounding.
The plaintiff’s attorney also pointed out that in July 2018, Musk’s confidants recommended that he tweet less or not at all. The 51-year-old initially said he couldn’t remember. But after he read statements from the confidants “to refresh the memory”, he did not deny it. He obviously didn’t comply, Musk said.
Was Musk aware he was making false statements?
Judge Edward Chen found in the proceedings last year that Musk’s statements in the tweets were not true. While the jury is made aware of this at trial, it is expected to evaluate whether those statements were relevant to investors – and harmed them by relying on them. They also need to determine whether Musk was aware that he was making false statements.
The tweets had already caused serious trouble for Musk and Tesla. The billionaire and the company both paid fines of $20 million each for misleading investors, according to investigations by the US Securities and Exchange Commission. In addition, Musk had to give up the chairmanship of the board of directors and undertake to have Tesla approve potentially price-sensitive tweets.