The judge concludes that “there was nothing concrete” in the Saudi financing of the privatization of the manufacturer of electric cars.
A US court has ruled that Elon Musk’s 2018 tweets claiming funding was secured to take Tesla private were inaccurate and reckless, delivering a major victory for investors who alleged the billionaire had artificially inflated stock prices.
U.S. District Judge Edward Chen of San Francisco concluded that “there was nothing concrete” about Saudi Arabia’s sovereign wealth fund funding at the time.
In 2018, Musk met with officials from Saudi Arabia’s Public Investment Fund and discussed Tesla’s privatization, but evidence shows “there was nothing concrete in the funding from the PIF,” wrote the judge.
“On the contrary, the discussions between Tesla and the PIF were clearly at the preliminary stage.
“No reasonable jury could conclude that Mr. Musk did not act recklessly given his clear knowledge of the discussions,” he said.
Chen said details such as the total amount of financing needed to take Tesla private or the price to pay for Tesla stock were not discussed.
The summary judgment, handed down on April 1, was sealed for more than a month before being made public on Tuesday.
“This is extremely important,” shareholder attorney Nicholas Porritt, a partner at Levi & Korsinsky LLP, told Reuters.
He said it’s rare for class action plaintiffs to get summary judgment on falsity and science — referring to knowingly or recklessly false statements — before going to a jury trial.
The remaining question is what damage the intentional misrepresentation caused to shareholders, he said.
The judge declined to grant shareholders summary judgment on whether the allegedly false statements actually impacted Tesla’s stock price.
Musk’s attorney, who filed motions to overturn the court’s decision, was not immediately available for comment. Musk recently said the funding was actually secured to take Tesla private in 2018.
The latest move was in line with a complaint from the US securities regulator that sued Musk for securities fraud over tweets in 2018. Musk settled with the US Securities and Exchange Commission, resigned as chairman of Tesla, paid fines and agreed to have a lawyer. approve some of his tweets before posting them.