A judge questioned Elon Musk’s claim that his now-famous 2018 tweet about taking Tesla private was true.
The billionaire and his electric-car company could be heading to trial soon in a battle with shareholders who claim the Twitter post cost them billions of dollars.
Musk reiterated in a court filing last month what he explained three and a half years ago: Saudi Arabia’s sovereign wealth fund had to support his attempt to take the company private.
“It doesn’t appear to me to be a very complicated factual situation,” US District Judge Edward Chen said at a hearing Thursday in San Francisco. He went on to say that, while the Saudi fund expressed interest, “funding had not been secured.”
Parsing Musk’s intent behind the Twitter post is at the heart of a dispute over whether the statement was “indisputably false,” as shareholders argue, or “entirely truthful,” as his lawyers claim.
Investors are requesting that Chen decide a couple of key legal issues without the involvement of a jury. If the investors win, they will be able to focus solely on linking Musk’s alleged false statement to their stock market loss at trial.
The Securities and Exchange Commission sued Musk and Tesla for fraud in response to the tweet in 2018. Musk is now attempting to have the restrictions on his tweeting lifted that he agreed to as part of a settlement in that case. “I would never lie to shareholders,” Musk said in a sworn statement to a New York judge handling the SEC case this week. “Let’s talk about falsity,” Chen said at the start of the hearing on Thursday. Much of the subsequent discussion centered on the phrase “Funding secured.”
According to Alex Spiro, Musk’s lawyer, shareholders are overthinking the tweet. “I’m concerned about dissecting it too much,” he admitted to Chen, adding that “context matters.” Spiro pointed out that Musk is wealthy enough to fund the going-private transaction himself.
“There has never been a funding issue in any of Mr. Musk’s transactions,” he told the judge.