A jury has found Elon Musk not guilty in the case of his tweet about taking Tesla private at $420 a share.
Five years later, this single tweet is still haunting the Tesla CEO.
For those who don’t remember the situation, back in 2018, Musk briefly considered trying to bring Tesla private and disclosed his intentions to investors through a simple tweet.
The Security and Exchange Commission (SEC) ruled that Musk exaggerated and misled shareholders when saying that the funding was “secured” in the tweet:
Musk went on a campaign against the SEC, calling them names and claiming that they were working for people shorting the electric automaker. But ultimately, Tesla and Musk ended up reaching a settlement with the SEC.
As part of the settlement, Musk agreed to step down from the role of chairman of the board, and Tesla and Musk had to each pay $20 million in fines.
The CEO presumably didn’t want Tesla to have to pay for his issue with the SEC. While he couldn’t directly pay for Tesla’s part of the fine, he decided to buy $20 million worth of shares from Tesla. That way, he sort of indirectly ended up paying for Tesla’s fine – though he also ended up with ~71,000 additional Tesla shares in the process.
As we previously reported, Musk ended up actually making money from the settlement due to Tesla’s stock price surging.
Another part of the settlement was that Musk and Tesla had to agree for the former to have his tweets reviewed by the latter’s legal department if they are material to the company.
Musk has consistently denied any wrongdoings and claimed he settled with the SEC under pressure from Tesla investors.
Separately, Tesla investors have sued Musk personally over the tweet, claiming that they were defrauded of millions of dollars as Musk exaggerated the claim that funding was secured.
The case was ongoing for years, but it was finally heard by a jury in northern California last week.
Today, the jury released its verdict – finding Musk not liable for the investors’ losses.
Musk commented on the verdict:
Thank goodness, the wisdom of the people has prevailed! I am deeply appreciative of the jury’s unanimous finding of innocence in the Tesla 420 take-private case.
That’s probably the end of this saga – though Musk is still fighting some of the aspects of his settlement with the SEC, primarily the need to review his tweets that are material to Tesla’s stock.
That’s probably the right thing.
As we previously reported, all the evidence pointed to Musk being a bit too excited and jumping the gun with the tweet.
For him to be found liable, they would have to prove that he was intentionally planning to defraud investors, and that’s a tall task.
He certainly should be more cautious about tweeting things like that when no deal has been signed, but I don’t think it’s fraud.
However, you’d hope that he would have become more cautious about his tweeting after this entire saga, but we haven’t seen much evidence of that either.
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