The billionaire and his electric-car company may soon be headed to trial in a fight with shareholders who allege the Twitter post cost them billions of dollars in losses.
To fend off allegations that the missive was fraudulent, Musk repeated in a court filing last month what he explained three and a half years ago: Saudi Arabia’s sovereign wealth fund had agreed to support his attempt to take the company private.
“It seems to me it’s not factually very complicated,” US District Judge Edward Chen said at a hearing Thursday in San Francisco. He added that though the Saudi fund had expressed interest, “funding had not been secured.”
Parsing Musk’s intent behind the Twitter post is at the heart of a dispute about whether the statement was “indisputably false,” as the shareholders argue – or, as his lawyers say, it was “entirely truthful.”
Investors are asking Chen to decide a couple of key legal issues by himself, without putting them to a jury. A ruling in favour of the investors would allow them to focus at trial solely on connecting Musk’s alleged false statement to their stock market loss.
Back in 2018, the tweet also got Musk and Tesla sued for fraud by the Securities and Exchange Commission. Musk is now seeking to be freed from restrictions on his tweeting that he agreed to as part of a settlement of that case. “I would never lie to shareholders,” Musk said this week in a sworn statement to a New York judge who’s handling the SEC case. “Let’s talk about falsity,” Chen said at the start of Thursday’s hearing. Much of the debate that followed focused on “Funding secured.”
Alex Spiro, a lawyer for Musk, said shareholders are over-thinking the tweet. “I do worry about dissecting it too much,” he told Chen, adding that “context matters”. Importantly, Musk is rich enough that he could have funded the going-private transaction himself, Spiro said.
“None of Mr. Musk’s deals have ever had a funding issue,” he told the judge.
