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US judge deemed Elon Musk’s tweet on Tesla ‘false and misleading’: Investors

By Priyanka Verma 
Updated Date

New York: A federal judge has ruled that Tesla CEO Elon Musk’s 2018 tweets about having secured financing to take the company private were false, according to court filings by Tesla investors suing the billionaire over the tweets. The filing said that the court ruled April 1 that Musk’s 2018 tweets were “false and misleading.” The court “held that he recklessly made the statements with knowledge as to their falsity,” it said.

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The shareholders have accused Tesla of securities fraud over their stock market losses in the wake of the August 7, 2018 tweet, which caused the share price to fluctuate wildly for several days.

In a court filing late Friday, plaintiffs asked the federal judge in charge of the case, Edward Chen, to order Musk to stop saying publicly that he “secured” funding to take Tesla private at $420 a share, as he again stated on Thursday.

In the past, the billionaire entrepreneur has said he was in talks at the time with Saudi Arabia’s sovereign wealth fund and that he was confident he would reach a deal. But no agreement was ever announced.

According to the filing, Chen recently concluded in an order not made public that Musk’s statements were “false and misleading,” and made “recklessly and with full awareness of the facts that he misrepresented in his tweets.”

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Plaintiffs accused Musk of engaging in “a high-profile public campaign to present a contradictory and false narrative regarding his August 7, 2018 tweets” — which could influence eventual jurors assigned to the trial set for later this year.

The Securities and Exchange Commission, the US market regulator, also charged him with fraud in the wake of the tweets.

He eventually agreed to a deal to settle the charges, which required Tesla’s lawyers to review any social media posts with information deemed “material” to shareholders. He also paid a $20 million fine and stepped down as Tesla’s chairman.

Musk, who has unveiled a $43 billion hostile takeover bid for Twitter, said Thursday he felt forced into the deal with the SEC to save Tesla.

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