Elon Musk Is Being Sued Over Something He Tweeted About Tesla
The Securities and Exchange Commission is suing Elon Musk over a tweet he published in 2018 related to having secured funding to take Tesla private, due to it having the effect of falsely inflating Tesla stock.
When you become the richest man on the planet, you can expect that everything you say and do will be placed under a microscope to be examined by all of society across the globe. This is the reality that Elon Musk lives daily but compounding the scrutiny he receives, does not help him to have such a heavy reliance on the social media outlet Twitter to communicate. That is how he got himself into this current lawsuit because of a 2018 tweet he posted long before he owned the social media giant.
The tweet has cost Elon 20 million dollars in fines from the Securities and Exchange Commission which initially attempted to penalize him by stripping him of his CEO title with Tesla but settled for that hefty fine and the massive cost of legal fees to defend himself. The tweet simply stated that he was thinking of taking Tesla private at a price of $420 a share and had he left his tweet with just that statement he wouldn’t have had to deal with any of this, but then he included the words “Funding Secured.”
This set off a firestorm of stock movement for Tesla in the market which climbed an astounding 11% on the day of the tweet. This type of corporate insider information being shared with the mass public is unheard of and was the instigator in driving up Tesla’s stock price that day. The reality was the funding was not secured; he had just had a conversation with some Saudi investors about what amount of money it would take to move the company to a private entity but no agreement to even consider funding had been made.
This meant that the inaccurate information he spread on Twitter about the funding falsely inflated the stock prices and anyone with knowledge of the truth could have dumped their stock when it hit the high that day of $387.46. Then repurchased the stock a month later when it came to light that funding had not been secured as the stock dipped to $263.24 a share.
A move like that would have made insiders potentially hundreds of millions of dollars. That is when the SEC got involved, and Elon settled the fines with them, CNN Business reported him saying, ”he only agreed to the settlement because continuing to fight would have resulted in banks cutting off the funding that Tesla needed to survive, which was then losing money and facing a cash crunch.”
Last year in a TED Talk Elon Musk commented, “the negotiations with the SEC are comparable to someone pointing a gun to his child’s head.” Now he and a few Tesla directors are facing a shareholder lawsuit that was filed four years ago regarding the negative impact that his tweet caused some shareholders at the time.
However, if you take a close look at the timeline that tweet marked the beginning of incredible run-on shares of Tesla even with the end-of-the-month dip. Over the 4 years since that tweet, the stock for the company has split twice and is currently valued at $409.97. That is a 1,520% increase for that original share from four years ago is now valued at $6,150 a share which is an amazing investment.
Elon’s lawyers have has filed motions for a change of venue to move the trail to the state of Tesla headquarters in Austin, Texas instead of in the state where the headquarters was when he posted the tweet which is San Francisco, California because of a tainted jury pool due to the recent local layoffs of many employees of Twitter. They are awaiting a final decision from the bench on that motion. He also is awaiting a decision on a bench trial for a separate shareholder case in the Delaware State Court system. There is an awful lot of litigation surrounding Elon Musk currently which is more fodder for the public along with his tenuous purchase recently of Twitter there is a whole lot to keep up with in the world of Elon Musk.
