Yesterday, in a California courtroom, an attorney for Tesla’s shareholders proclaimed that the company’s CEO Elon Musk lied when he stated financing had been procured to take Tesla private. Yet, Musk’s lawyer claimed his client merely chose incorrect words while explaining his plans for 2018.
Glen Littleton, an investor of Tesla, is looking for compensation on behalf of shareholders who traded in the company following Elon Musk’s announcement posted via Twitter to delist Tesla from the stock market.
After a 9-person jury was selected on Tuesday in San Francisco, the fraud trial commenced and is expected to last an astonishing 3 weeks.
On August 7th, 2018, Musk made a startling revelation when he declared that if the stock price reached $420 per share, his group would withdraw from the equity market. Subsequently, Musk is included on the witness list.
On August 16th, the electric car manufacturer’s stock plummeted from its peak of $386.48 to a low of $335.45 according to statistics presented by Judge Edward Shin during the court proceedings.
The plaintiffs intend to demonstrate that the defendant fabricated deceptive and inaccurate claims with malicious intent, which resulted in losses for them during this period,” declared the judge.
During opening statements, Chief investor attorney Nicholas Porritt informed the jury that he believed Elon Musk’s lies caused “regular people” to suffer millions of dollars in losses.
Alex Spiro, Musk’s legal advisor, rebuked that description, affirming that the tycoon was “committed” to delisting the organization from Wall Street in 2018 yet eventually confronted shareholder resistance.
In his inaugural statements, Spiro confidently declared that the proceedings would soon establish beyond a shadow of doubt that no fraudulence was involved. He went on to explain to the jury how Musk presumed funding wasn’t an issue and had taken steps towards closing a deal.
Spiro highlighted that Musk was concerned about certain investors learning of his plan to delist the company from the stock exchange, and sought to alert the “ordinary” shareholder who wanted “to protect him”. However, an array of technical inaccuracies were included in his tweets. To further add on, Spiro stated that Musk had hastily used incorrect wording when expressing this message.
The jury shall make a judgment on whether the tweets increased Tesla’s stock price by overestimating the financing condition of an agreement, and if so, to what extent.
Among the defendants are current and former Tesla executives, whose intent Spyro described as being “pure” in relation to Musk’s plan.
Spiro declared that Tesla’s stock price surged in reaction to Musk mentioning he was “contemplating” delisting the company from the exchange, which proved to be genuine. He also pointed out that this surge wasn’t caused by Musk’s “confirmation” concerning financing.
Every year, shareholders launch suits against hundreds of firms and their executives over alleged securities fraud. However, most cases don’t even make it to trial due to the courts quickly dismissing them or parties settling out of court.
