{"id":8718043,"date":"2023-01-17T07:09:50","date_gmt":"2023-01-17T15:09:50","guid":{"rendered":"https:\/\/www.eastbaytimes.com\/?p=8718043&preview=true&preview_id=8718043"},"modified":"2023-01-17T07:33:55","modified_gmt":"2023-01-17T15:33:55","slug":"elon-musks-tesla-tweets-could-cost-him-billions-more-in-court","status":"publish","type":"post","link":"https:\/\/www.eastbaytimes.com\/2023\/01\/17\/elon-musks-tesla-tweets-could-cost-him-billions-more-in-court\/","title":{"rendered":"Elon Musk\u2019s Tesla tweets could cost him billions more \u2014 in court"},"content":{"rendered":"

By Joel Rosenblatt | Bloomberg<\/strong><\/p>\n

It took only a couple of tweets to plunge Elon Musk into the morass of a securities fraud trial that could cost him billions of dollars from his rapidly diminishing fortune.<\/p>\n

The Tesla Inc. chief executive officer is set to be the star witness at a jury trial that starts Tuesday in San Francisco federal court over his infamous tweets 4 1\/2 years ago about a plan to take the electric-car maker private with \u201cfunding secured.\u201d<\/p>\n

Lawyers for the shareholders will try to show jurors that Musk lied in the statement, and that it caused them deep losses from wild stock price swings over a 10-day period before the plan was abandoned. Musk\u2019s defense team will work to tear down that narrative.<\/p>\n

Losing a class-action case of this magnitude could put Musk on the hook for damages in the billions of dollars, according to Adam Pritchard, a professor at University of Michigan Law School.<\/p>\n

\u201cElon enjoys a good fight,\u201d Pritchard said. \u201cHe has a lot of money, and is apparently willing to take substantial risks with that money.\u201d<\/p>\n

The trial comes as Musk\u2019s wealth has dwindled from a peak of $340 billion in November 2021. He became the first person in history to lose more than $200 billion, all while he spent $44 billion to acquire Twitter Inc. Last month, he was dethroned as the world\u2019s richest person and Tesla\u2019s stock plummeted 37% since Dec. 1, with the electric car maker facing increased competition and a looming recession.<\/p>\n

The stir created by the August 2018 tweets is best remembered for throwing Musk into the orbit of the US Securities and Exchange Commission. It resulted in a pledge from Musk to have his future social media posts screened by a Tesla lawyer.<\/p>\n

Investors must prove Musk knew his tweets were misleading, and that they were \u201cmaterial,\u201d or important to a reasonable investor. Shareholders would also need to tie Musk\u2019s tweets to their trading losses.<\/p>\n

US District Judge Edward Chen has already hobbled Musk with a pretrial ruling that the tweets were reckless and false \u2014 and he will tell the 12-member jury to assume that from the get-go, to set the parameters of the trial.<\/p>\n

That instruction to the jury puts Musk at a \u201chuge disadvantage,\u201d Pritchard said.<\/p>\n

To beat back the allegations he was deceitful, Musk has said in court filings he may call on others who can vouch for the take-private plan, including friend and confidant Larry Ellison, as well as executives at Goldman Sachs, Morgan Stanley and private-equity firm Silver Lake Management.<\/p>\n

Musk\u2019s lawyers have failed repeatedly to persuade Chen not to share his finding with the jury, saying as recently as last week that it could be \u201chighly prejudicial\u201d to the CEO\u2019s defense.<\/p>\n

A lawyer for Musk declined to comment before the start of the trial and an attorney for the shareholders didn\u2019t respond to a request for comment.<\/p>\n

Musk has insisted his short-lived plan to take Tesla private was solid based on discussions he had with Saudi Arabia\u2019s sovereign wealth fund. He subpoenaed the governor of the Kingdom\u2019s Private Investment Fund to testify at the trial, but withdrew the request after attorneys for Yasir Al-Rumayyan argued he isn\u2019t legally obligated to show up.<\/p>\n