Billionaire and Tesla CEO, Elon Musk is defending himself in a San Francisco court, in a class-action lawsuit filed by Tesla investors alleging that Musk’s 2018 tweets misled them. Back in August 2018, Tesla’s boss tweeted that he was considering taking the electric vehicle company private at $420 adding that he had secured the funding for it. The deal never came close to happening and resulted in $40 million settlement between Musk and securities regulators.
Musk is accused of defrauding investors as his tweets sent Tesla shares soaring, which fell back when the CEO announced that he is no longer pursuing the deal. It also lead to major backlash for him. The Securities and Exchange Commission (SEC) intervened and asked Musk to step down as Tesla’s chairman. The regulator also ordered him to have Tesla-related tweets vetted by an independent committee. Both Musk and his car-making company were fined $20m each to settle the claim by the SEC that he had committed securities fraud.
In the trial, Musk is defending himself claiming that there is no connection as such between his tweets and the movements in share prices.
On Monday, Musk testified before a nine-person jury to try to explain the tweets. Musk and his attorney claimed that the deal was seriously considered for about two weeks. The billionaire said that he had met with a Saudi Arabia sovereign wealth fund, which indicated support for a deal. But he also admitted that a specific funding amount was never discussed.
The deal was eventually scrapped following discussions with smaller investors, wanting the firm to remain publicly traded on the stock market, Musk claimed. He said he believed sharing his plans for the potential buyout was the “right thing” to do because he was concerned that media reports about Saudi Arabia’s stake in the company would put ordinary investors at a disadvantage.
“I was concerned when receiving the Financial Times article that the information had leaked and that some investors would be aware that I was considering taking the company private and this would disadvantage other investors, especially small shareholders,” he was quoted saying in a BBC report.
As per reports that accessed the transcript of the ongoing trial, Musk claimed that he owned around 19 per cent of Tesla at the time. Now, after selling almost shares worth $40 billion to pay taxes and help fund his Twitter acquisition, he now owns about 13 per cent.
According to Bloomberg Billionaire Index, Musk has lost about $195 billion from his net worth, which is further expected to go down to $200 billion, by the end of 2023.