The backstory:
- Just a quick explainer: a class-action suit Is when a group of people who have been injured in a similar manner file a single lawsuit to seek compensation as a collective.
- With that out of the way, Elon Musk, chief executive officer of Tesla, Inc., has a class-action lawsuit against him from investors who say that his tweets about the company have cost them billions of dollars.
- The specific tweet that has some investors steaming is from August 2018, when Musk said he would take Tesla private. This tweet did strange things to the company’s share price, taking the stock value up as much as 13%, only to be followed by a blog post a few weeks later with Musk saying the company would stay public for a few more weeks.
- This led to the United States Securities and Exchange Commission (SEC) suing Musk for fraud in September of the same year, saying that Musk never told them about going private, nor did he get approval from his existing investors. In the end, Musk settled, paid US$40 million in fines and agreed to find a new chairman. Now, he also has to have his tweets about the company pre-approved by lawyers.
- Since then, Musk has frequently taunted the agency on Twitter.
The development:
- The investors behind the class action lawsuit are now seeking a judge’s ruling. The trial is set for May 31, and a hearing is scheduled for next month.
- But, Musk’s legal team argues the statements to take the company private were true.
- “Elon Musk’s August 7, 2018 tweet informing the public that he was considering taking Tesla private was entirely truthful,” Musk’s attorney Alex Spiro said in a heavily redacted filing. “Mr. Musk was considering taking Tesla private at $420 a share. Funding was secured. There was investor support.”
- Musk’s lawyers also added that Saudi Arabia’s sovereign wealth fund had indeed agreed to support his attempt to take the company private.
- Saudi Arabia’s sovereign wealth fund is one of the main tools for Crown Prince Mohammed Bin Salman’s plans to diversify the Saudi economy away from oil.
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