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Musk endures last day of testimony in securities trial over 2018 tweet

Elon Musk defended his effort to take Tesla private, but not before some serious grilling by investors' attorney.

SAN FRANCISCO (CN) — Tesla CEO Elon Musk walked out of the federal courtroom Tuesday morning after three days of testimony in a high-profile securities trial stemming from a lawsuit filed by Tesla shareholders who say they were misled by an Aug. 7, 2018, tweet in which he said he had secured financing for a Tesla buyout.

That buyout never came to fruition, however, and stockholders cried foul.

The billionaire’s nine-word tweet stating “Am considering taking Tesla private at $420. Funding secured,” is what set everything in motion. Tesla stock jumped in value and then sank when it when it became clear nothing of the sort was going to happen. It also cost Musk $40 million when the U.S. Securities and Exchange Commission fined him following an investigation.

Musk faced several hours of aggressive questioning by the shareholders' attorney Nicholas Pirrott, who has been trying to prove that the tech executive knew he didn’t have the funding to take the electric car company private. U.S. District Judge Edward Chen had already ruled that jurors should accept that the tweets were untrue.

Pirrott, however, has been repeatedly hammering home the fact that, despite Musk’s insistence to the contrary, Musk did not have the funding he needed to take Tesla private, and he pointed to the fact that nowhere in the many emails and texts between Musk and interested parties was a specific amount of money ever discussed.

In Musk’s discussions with the Saudi Arabian Private Investment Fund, Porritt asked, had a specific dollar amount ever been mentioned?

“I believe we did have some discussion,” Musk replied. ”They had 5% of the company and they knew what was required to take Tesla private and they committed to do so.”

Pirrott doubled down. “They never committed to an amount? You did not discuss an actual amount of funding?” he asked.

Throughout the trial, Musk has repeatedly tried to stress he had other funding sources available whether the Saudis came through or not, including the sale of his own SpaceX shares, although Musk acknowledged he was loathe to do so. In fact, Musk acknowledged he hadn’t received a specific dollar amount from any of the people he felt he could count on to make the buyout a done deal.

Musk testified that, in his blog post of Aug. 7, 2018, posted a few hours after the “Funding is secured” tweet, he wanted to honor shareholders’ wishes and that he would prefer they stay with Tesla as a private company.

“That speaks to funding,” Musk said. “What I’m saying here is that I hope for all shareholders to remain.”

“And you think that’s a source of funding?” Pirrott asked.

“This is not an investor email,” Musk replied.

In another exchange, Pirrott reminded Musk of his claim that he’s never lost money for investors, and then brought up the investors suing Musk for the millions they claim to have lost as a result of the failed effort to take Tesla private.

“I have the best track records with investors of anyone in the world,” Musk replied.

Pirrott asked if Musk might agree that he had lost money for investors like plaintiffs Glenn Littleton and Timothy Fries.

“I don’t think so,” Musk responded.

Eventually, Musk’s defense lawyer Alex Spiro returned to question the CEO. He asked if a small investor had purchased stock during the period of time when the tweets were attracting so much attention, would they have lost money? What if they had held their stock?

“It would have gone up literally 1000%,” Musk replied.

When the court finally adjourned for a break, the Tesla CEO was allowed to leave. The trial continues Wednesday.

Categories / Securities, Technology, Trials

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