Lawstreet Journal

Tesla investor sues Elon Musk over 'erratic' tweets.

Lawstreet Journal 17 Mar 2021 10:38pm

Image courtesy: Lawstreet Journal Judiciary Tesla investor sues Elon Musk over 'erratic' tweets.

Elon Musk and the Tesla board are facing a lawsuit from an investor who alleged a number of Musk's comments on Twitter violated a settlement with the Securities and Exchange Commission meant to temper his communications. 

The complaint unsealed on a late Thursday (March 11, 2021) in Delaware Chancery Court, revealed 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 substantial damage including billions of dollars of losses.

In 2018, the SEC charged Musk with securities fraud for a tweet saying he would take Tesla private if the stock price hit $420. The parties came to a settlement, in which Musk was forced to step down as the company's chairman and Tesla was required to put in place procedures to oversee Musk’s communications relevant to Tesla shareholders.

According to the plaintiff, Musk's actions and the directors' inaction have caused "substantial financial harm," and that damages should be paid 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.

To quote Charles Elson, a University of Delaware professor and corporate governance specialist "It could pressure the SEC into taking some sort of recourse," 

Even though 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, however Musk was… Continue Reading...

Tagged: Elon Musk  
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