Thursday, February 9, 2023 | Back issues
Courthouse News Service Courthouse News Service

Musk testimony resumes in securities trial over 2018 tweet

Elon Musk testified he was concerned about being honest with shareholders when he tweeted his plans to take Tesla private.

SAN FRANCISCO (CN) — Tesla CEO Elon Musk endured a full day Monday of frequently tough questioning at the hands of the plaintiffs’ attorney in the securities trial over a 2018 tweet in which Musk said he'd secured funding to take Tesla private — a deal that never materialized.

The New Zealand-born attorney Nicholas Pirrott appeared to be wearing Musk down at times, as the tech billionaire seemed tired, even stuttering at one moment. Musk apologized at one point, pleading fatigue from a lack of sleep and then a little later, a sore back. Pirrott, however, lunged forward, quickly and repeatedly interjecting with follow-up questions once Musk had answered, even though it was clear that he had intended to say more.

Musk faces trial in the lawsuit filed by Tesla shareholders who say they were misled by an Aug. 7, 2018, tweet in which he said he secured financing for a Tesla buyout. That buyout never came to fruition, however, and stockholders cried foul.

“Am considering taking Tesla private at $420. Funding secured,” the South African-born multibillionaire tweeted at the time. Tesla stock jumped in value and then sank when it when it became clear nothing of the sort was going to happen. The tweet also cost Musk $40 million when the U.S. Securities and Exchange Commission fined him following an investigation.

Much of Monday’s questioning revolved around what was happening the day of the tweet. A few hours before Musk hit the send button, he received an email from a Tesla colleague warning him that the Financial Times was planning to run a story that day, confirming the Saudi Arabian Private Investment Fund had a 3 to 5% stake in Tesla after buying shares on the open market earlier in the year, and despite the fact that both Musk and Yusin al-Rumayyan, director of the fund, had signed an nondisclosure agreement about their talks.

“If the Financial Times was aware of this level of private information, I was concerned it was important for the market as a whole to know,” Musk testified.

When Pirrott asked Musk if he'd bothered to read the article, Musk said, “By then it would have been too late. The cat was out of the bag.”

Musk testified it was important to him that all investors with a stake in Tesla were on equal footing, and that shareholders understood what his intentions were. Throughout the trial, whether through his tweets and emails produced as evidence, or simply through his testimony on the witness stand, Musk has stressed that he felt an obligation to shareholders.

“I wanted to do right for Tesla shareholders,” he told Pirrott at one point.

Pirrott reminded him that he knew a longer statement about the revelations in the Financial Times story would be coming out. Why resort to an abbreviated statement on Twitter? Musk replied that he was afraid shareholders would think he had abandoned them.

“You knew this statement was imminent,” Pirrott said. “Why send out an incomplete tweet?”

“It seemed like an important thing to convey to the public,” Musk replied.

Over the course of the hours-long questioning, Pirrott seized on another matter: how Musk planned to fund a take-private drive. If the Saudis didn’t provide funding, how could Musk afford to take Tesla private?

In addition to working with other potential investors, Musk said he would have reluctantly sold SpaceX shares to cover the costs, an act he said that would have saddened him but which he saw as potentially necessary. Pirrott noted repeatedly that option had not been brought up in the numerous exchanges about the deal.

Musk got a chance to address that, however. In the final hour of testimony Monday, his attorney Alex Spiro brought up as evidence a statement from Musk that using SpaceX shares was a possibility.

In that last hour of testimony, the billionaire seemed to brighten — a mood that may extend into Tuesday when he resumes testimony under cross by Spiro.

Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.

Loading
Loading...