scorecardresearch
Follow Us:
Monday, April 19, 2021

Tesla investor sues Musk, claims tweets violate SEC settlement

The complaint highlighted several Musk posts on social media platform Twitter, including his assessment last May 1 that Tesla's stock price was "too high," prompting a more than $13 billion tumble in Tesla's market value.

By: Reuters |
March 13, 2021 10:18:30 am
Elon Musk, Elon Musk Neuralink, Musk Neuralink, Musk Neuralink to help paralysis, Elon Musk news, Elon Musk latest tweet,Co-founded by Musk in 2016, San Francisco-based Neuralink aims to implant wireless brain computer chips to help cure neurological conditions like Alzheimer’s, dementia and spinal cord injuries (image credit : AP )

Tesla Inc Chief Executive Elon Musk has been sued by a shareholder who accused him of violating his 2018 settlement with the U.S. Securities and Exchange Commission over his Twitter use.

According to a complaint unsealed late Thursday in Delaware Chancery Court, which also names the electric car company’s board as defendants, Musk’s “erratic” tweets and the failure of Tesla directors to ensure he complied with the SEC settlement have exposed shareholders to billions of dollars of losses.

The complaint highlighted several Musk posts on social media platform Twitter, including his assessment last May 1 that Tesla’s stock price was “too high,” prompting a more than $13 billion tumble in Tesla’s market value.

Chase Gharrity, the plaintiff, said Musk’s actions and the directors’ inaction have caused “substantial financial harm,” and that they should pay damages to Palo Alto, California-based Tesla for breaching their fiduciary duties.

The lawsuit was filed even though Tesla’s share price has soared nearly fivefold since Musk’s “too high” tweet, giving Tesla a valuation well above $600 billion, and the SEC has not publicly accused Musk of recent violations.

“It could pressure the SEC into taking some sort of recourse,” said Charles Elson, a University of Delaware professor and corporate governance specialist. Tesla did not immediately respond on Friday to requests for comment.

Gharrity’s lawyers, Musk’s lawyers in the SEC case, and the SEC did not immediately respond to similar requests. The SEC settlement followed Musk’s August 2018 tweet that he had “funding secured” to possibly take Tesla private in a $72 billion transaction.

In reality, Musk was not close.Musk and Tesla each paid $20 million in civil fines, and Tesla lawyers agreed to vet some of Musk’s tweets in advance. The settlement was later amended to clarify when pre-approvals were required, prompted by a unvetted tweet by Musk about Tesla’s vehicle production forecast.

Last April, a San Francisco federal judge said Tesla and Musk must face a lawsuit claiming Musk’s going-private tweet defrauded shareholders. That case remains pending. The case is Gharrity v Musk et al, Delaware Chancery Court, No. 2021-0199.

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest World News, download Indian Express App.

  • The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.
0 Comment(s) *
* The moderation of comments is automated and not cleared manually by indianexpress.com.
Advertisement
Advertisement
Advertisement
Advertisement
x