Elon Musk takes stand in Tesla tweet fraud trial

Tesla Chief Executive Elon Musk appeared on Friday in a fraud trial in California accused of punishing investors by lying about tweets about taking the auto company private.

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January 21, 2023 at 11:29 am

Tesla CEO Elon Musk walks next to a screen showing an image of a Tesla Model 3 car during the opening of Tesla’s China-made Model Y program in Shanghai, (file photo) (Reuters)

Angry investors accused Musk of losing millions of dollars in 2018 with false tweets claiming he was buying shareholders’ money at $420 a share.

The billionaire’s tweets sent Tesla shares on a rollercoaster ride, with Musk being sued by shareholders who say the tycoon acted recklessly in an attempt to squeeze investors who were bearish on the company.

Musk, who bought Twitter in October, downplayed the impact of his tweets, pointing out in questioning that he had posted that he thought Tesla stock was overvalued and that “the stock price went up, which is counterintuitive. “

“I would say that causation clearly doesn’t exist just because of one tweet,” Musk said in the testimony, which lasted just 30 minutes and will continue on Monday.

Friday’s hearing was led by Harvard law and business professor Guhan Subramanian, who was called by the plaintiffs as an expert witness.

He called Musk’s tweeted proposal to take Tesla private “illusory” and “completely false” because it was so different from the way such large deals usually happen.

“All I can say is that it’s wrong; as a matter of the course of the deal … it’s not right,” Subramanian said when questioned by defense attorneys about Musk’s tweet.

“reckless” words

Testimony at the trial opened on Wednesday, with a lawyer for the distraught investor telling jurors that Musk lied about the funds.

Nicholas Polritt, who is representing lead plaintiff Glenn Littleton and other Tesla investors, said the tweets cost “ordinary people” “millions of dollars.”

As the first witness, Littleton, 71, told jurors that he invested heavily in Tesla in 2018 in anticipation of the stock price climbing to $500 or more.

Littleton testified that he was “pretty appalled” by Musk’s tweet about taking the company private at $420 a share because it threatened nearly all of the money he had invested in Tesla.

“It pretty much wiped me out,” Littleton said.

Littleton told jurors he went to great lengths to save his investments, liquidating most of his positions at huge losses.

Musk is expected to continue testifying on Monday, when his lawyers will have a chance to refute the allegations of deceit.

The case revolves around two tweets in which Musk said “funding is in place” for the acquisition of the publicly traded electric car maker, before adding in a second that “investor support confirmed.” .

Poritt told jurors that Musk chose the $420 share price in the tweet “as a joke” and that the money to take Tesla private was never locked up or credibly sought.

In his own opening remarks, Musk’s lawyer, Alex Spiro, said that while the tweets may have been “recklessly worded,” they were “not fraudulent, not even fraudulent.”

The fraud trial is expected to last three weeks.

First published date: Jan 21, 2023 at 11:29 AM CST


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