Tesla CEO Elon Musk has been sued by a group of its shareholders due to his 2018 tweets that indicated that he wants to take the electric car company private. The Tesla shareholders have asked the judge to order the CEO not to comment on this case anymore.
According to the lawyers for these shareholders, the judge, in this case, ruled that the statement that Musk had secured funding to turn Tesla into a private company was false. Instead, Musk’s tweet to take the company private at $420 per share was to manipulate its share price, thus costing shareholders money. Therefore Musk’s present comments violated the court settlement with US securities regulators in 2018. In this court settlement, both Tesla and Musk agreed to pay $20 million in fines.
However, during the TED 2022 conference on Thursday, Musk was interviewed and said he had “funding secured” to take Tesla private in 2018. He further called SEC a profane name and stated that he agreed to the court settlement because bankers threatened not to provide capital if he failed to settle, and the company would go bankrupt.
The lawyers representing Tesla shareholders allege that Musk’s comments are campaigns to influence potential jurors in this lawsuit as it gets closer to trial. They wrote, “Musk’s comment risks confusing potential jurors with the false narrative that he did not knowingly make misrepresentations with his August 7, 2018 tweets. His present statements on that issue, an unsubtle attempt to absolve himself in the court of public opinion, will only have a prejudicial influence on a jury.”
The plaintiff’s lawyers want Judge Edward M. Chen to restrain the CEO from commenting on the issue further until after the trial. Because of that, lawyers representing Elon Musk have up to Wednesday to respond to this case. However, according to one of Musk’s lawyers, Alex Spiro, the shareholders’ lawyers are seeking a big payout.
He wrote, “Nothing will ever change the truth, which is that Elon Musk was considering taking Tesla private and could have. All that’s left some half-decade later is random plaintiffs lawyers trying to make a buck and others trying to block that truth from coming to light, all to the detriment of free speech.”
On the other hand, the shareholder’s lawyers confirmed that the judge had already ruled and termed Musk’s tweets as false and misleading thus, “no reasonable juror could conclude otherwise.” The judge’s order dated April 1 was sealed because of some evidence that the CEO and the company consider confidential thus, it was missing in the public court file. Adam Apton representing the shareholders, wrote, “Our motion for a temporary restraining order (TRO) accurately describes the issues decided by the court.”
The 2018 court agreement arose because of Musk’s tweets about Tesla, where SEC filed a complaint alleging securities law violations. The CEO agreed to the fine and the court agreement that partly says he “will not take any action or make or permit to be made any public statement denying, directly or indirectly, any allegation in the complaint or creating the impression that the complaint is without factual basis.”
SEC will ask the court to do away with the agreement in the event of any violations and restore the securities fraud complaint. But lawyers on behalf of Musk have asked the federal court to scrap the agreement because SEC uses its “near-limitless resources” to silence Musk. According to Spiro, the lawyer who filed the court documents, the agreement was signed when Tesla was much younger, and the action has jeopardized its financing.
This court action and the interview happened when Musk had just made a controversial offer where he wanted to buy Twitter and convert it into a private company. The $43 billion offer is equivalent to $54.20 per share; however, the social media board adopted a “poison pill” strategy on Friday that makes it prohibitively expensive for the world’s richest person to buy the shares.