SAN FRANCISCO (AP) — Opening statements begin on Wednesday in a trial that will determine whether Tesla CEO Elon Musk cheated investors by saying in 2018 tweets that he raised funding to take the electric car maker private.
A nine-member jury convened on Tuesday in a case that is expected to include testimony from Musk explaining his thoughts during one of his favorite pastimes, tweeting on the Twitter service he now owns.
Musk’s tweets triggered a surge in the company’s share price, which ended abruptly a week after it became apparent he didn’t have the funds to buy back after all. Investors then sued him, saying that Tesla’s stock wouldn’t have fluctuated so much if he hadn’t hesitated at the prospect of buying the company for $420 a share.
Musk’s tweet also drew the attention of securities regulators, who concluded that it was unacceptable and that he was lying. In the settlement, they made him pay $40 million and demanded that he step down as chairman of Tesla.
He has since claimed to have entered into the settlement under duress and claims that he believes he blocked financial support for the buyout during meetings with representatives of the Saudi Arabian Public Investment Fund.
Despite major changes to Twitter, Musk continues to serve as Tesla’s CEO and derives much of his wealth and fame from the company.
The lawsuit hinges on an August 7, 2018 tweet in which Musk stated that he had raised funding to pay for a $72 billion Tesla buyout, which he then reinforced with a subsequent statement that made the deal inevitable.
But the ransom never took place, and now Musk will have to explain his actions under oath in federal court in San Francisco. The class action lawsuit was filed on behalf of investors who owned Tesla shares for 10 days in August 2018.
The outcome of the trial could affect the jury’s interpretation of Musk’s motives for the tweets, which U.S. District Judge Edward Chen has already ruled to be false.
On Friday, a judge gave Musk another setback when he rejected Musk’s proposal to take the trial to federal court in Texas, where Tesla moved its headquarters in 2021. Musk claimed that the negative Twitter coverage of his purchase poisoned the jury pool in court. San Francisco Bay Area.
The difficulty of finding a jury without strong feelings for Musk became apparent during Tuesday’s painstaking selection process.
At one point, the judge noted some potential jurors who expressed extreme misgivings or enthusiasm for Musk in pre-trial questionnaires. The seven jurors were questioned individually, away from the rest of the jurors, to reduce the chances of swaying the opinions of others in the courtroom.
Chen and attorneys for both the shareholders and Musk questioned seven of those jurors, who variously described Musk as “arrogant”, “narcissistic”, “unpredictable”, “a little crazy”, “mercenary” and “genius”. “.
Musk’s lead on Twitter, where he gutted staff and alienated users and advertisers, has proved unpopular with current Tesla shareholders, who are concerned that he is devoting less time to the automaker at a time of increased competition.
Those fears contributed to a 65% drop in Tesla stock last year that wiped out more than $700 billion of shareholder wealth — far more than the $14 billion fortune swing that occurred between the company’s high and low stock prices from August 7 to August. , 17, 2018, the period covered by the lawsuit.
Since then, Tesla shares have split twice, bringing the $420 price to $28 on an adjusted basis. The stock closed last week at $122.40, compared to the company’s November 2021 peak of $414.50.
After Musk dropped the idea of a Tesla buyout, the company overcame a manufacturing problem, resulting in a rapid increase in car sales, causing its stock to skyrocket and making Musk the richest man in the world until he bought Twitter. Musk has dropped from number one on the wealth list after the stock market’s backlash against his Twitter behavior.
The lawsuit is likely to provide insight into Musk’s management style, given that the witness list includes some of Tesla’s current and former top executives and board members, including luminaries such as Oracle co-founder Larry Ellison and James Murdoch, son of the media. tycoon Rupert. Murdoch.
The drama could shed light on Musk’s relationship with his brother Kimbal, who is also on the list of potential witnesses. The trial is expected to last until early February.
