(Bloomberg) - Elon Musk says his 2018 tweet about planning to take Tesla Inc. private was “entirely truthful” and that investors who claim the missive was fraudulent are wrong.
Lawyers for the billionaire chief executive officer of the electric-car maker said in a court filing Tuesday that Saudi Arabia’s sovereign wealth fund had indeed agreed to support his attempt to take the company private.
“Elon Musk’s August 7, 2018 tweet informing the public that he was considering taking Tesla private was entirely truthful,” the CEO’s attorney Alex Spiro said in a heavily redacted filing. “Mr. Musk was considering taking Tesla private at $420 a share. Funding was secured. There was investor support.”
The tweet roiled Tesla’s shares and led the U.S. Securities and Exchange Commission to sue Musk for fraud. The SEC said in its September 2018 complaint that the CEO had never discussed a going-private transaction at $420 a share with any potential funding source, nor had he confirmed support from investors.
Musk and Tesla settled with the agency, agreeing to pay $40 million in fines and to name a new chairman. Musk has repeatedly attacked and taunted the agency since then.
Shareholders claim in a class-action suit pending in federal court in San Francisco that Musk’s tweets spurred wild swings in the company’s share price and caused billions of dollars in losses. The investors said in a heavily redacted filing of their own last month that while Musk met with Saudi Arabia’s Public Investment Fund, they never discussed the price or structure of a take-private transaction. They also claim Musk had sought to terminate talks with the PIF a day before citing their support in a blog post.
The investors are seeking a judge’s ruling -- ahead of a trial set for May 31 -- that Musk’s tweets were false statements. Ahead of a hearing scheduled for March, Musk’s legal team argues the statements were true.
“Not only did Mr. Musk firmly believe funding was secured when he tweeted, in reality (per Mr. Musk’s discussions with the PIF) it was secured,” according to Spiro’s filing. Representatives for the PIF declined to comment.
Lawyers for the investors said in Jan. 11 filing that they redacted parts of their argument to honor an agreement with Tesla’s attorneys to keep certain “protected material” sealed from public view, though they argue that the information “does not deserve confidential treatment.” Portions of the filings that have been redacted are nonetheless readable.
Earlier: Tesla Can’t Duck Lawsuit Over Musk’s Take-Private Tweet
Tesla’s stock surged as much as 13% after the take-private tweet, hammering short sellers who hadn’t covered their positions. Other investors who read Musk’s message as a buy signal sustained losses when doubts mounted about his ability to follow through and the company’s share price plummeted.
Musk announced he was keeping Tesla public a few weeks later via a Friday night blog post.
The case is In re Tesla Inc. Securities Litigation, 18-cv-04865, U.S. District Court, Northern District of California (San Francisco).
(Updates with shareholders’ January filing in the sixth paragraph.)
By Dana Hull
