Tesla Shareholders Want Musk Cut Off From Twitter

Tesla CEO Elon Musk speaks at a June 14, 2018, news conference in Chicago. (AP Photo/Kiichiro Sato, File)

WILMINGTON, Del. (CN) — Touting a class action they brought under seal, Tesla shareholders said Friday they are asking a judge to outfit Elon Musk with a Twitter muzzle.

Filed Thursday in Delaware Chancery Court, the complaint led by the Laborers’ District Council and Contractors’ Pension Fund of Ohio is not expected to become public until March 12. Attorneys at the firm Grant & Eisenhofer nonetheless touted their efforts in a press release this morning, saying the outspoken CEO must be controlled for the benefit of the company.

The complaint follows a Feb. 19 post by Musk to Twitter of an aerial photograph showing Tesla’s loading docks. 

“4000 Tesla cars loading in SF for Europe,” Musk wrote. “Tesla made 0 cars in 2011, but will make around 500k in 2019,” he added.

Though Friday’s press release does not quote the post itself, it recalls that the SEC had to take legal action against Musk for earlier tweets that inaccurately described Tesla’s efforts to go public and its production levels.

“Mr. Musk has continually disregarded all efforts to rein in his material misstatements on social media,” Grant & Eisenhofer director Michael Barry said in a statement.

“His conduct has not only cost Tesla shareholders dearly but threatens to expose the company to even greater liability and litigation in the future,” Barry continued. “For its part, the Board of Directors has been completely ineffective, and in fact Tesla still identifies Mr. Musk’s personal Twitter account as a source of official disclosures by the company. It has to stop.” 

The shareholders are seeking a declaratory judgment that tweets like these violate Musk and Tesla’s board’s fiduciary duty to investors. They also seek injunctive relief and monetary damages.

Monday meanwhile is the deadline that a judge set for Musk to explain why he should not be held in contempt for violating a 2018 settlement that requires his statements on social media to be preapproved. 

As part of those proceedings, the SEC will be seeking Musk’s possible suspension as CEO and significant fines. 

Media contacts for Tesla did not immediately respond to an email requesting comment.

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