US judge says Musk recklessly tweeted that ‘funding secured’ to take Tesla private

SAN FRANCISCO (Reuters) – A U.S. judge ruled that Elon Musk’s 2018 tweets about securing funding to take electric car maker Tesla Inc were inaccurate and reckless, saying there was “nothing concrete” about funding from Saudi Arabia’s sovereign wealth. fund at that time.

San Francisco-based US District Judge Edward Chen’s pretrial decision marks a major victory for investors in a lawsuit accusing the world’s richest person of inflating stock prices by making false and misleading statements, causing billions of dollars in damage.

Chen gave shareholders a summary judgment on the issue of whether Musk made intentionally false statements but declined to give them a summary judgment on the issue of whether the statements actually affected Tesla’s stock price.

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In 2018, Musk met with representatives of the Public Investment Fund in Saudi Arabia and had a discussion about giving Tesla a private company, but evidence showed that “there is nothing concrete about the funding coming from the PIF,” Al-Kadhi wrote.

“Instead, it is clear that discussions between Tesla and the Public Investment Fund were in the initial phase,” Chen said.

“The jury did not find a reasonable jury that Mr. Musk had not acted recklessly given his apparent knowledge of the discussions,” the judge added.

Chen said details such as the total amount of funding needed to take Tesla private or the price to be paid for Tesla shares were not discussed.

The summary ruling, issued on April 1, was sealed for more than a month before it was released to the public on Tuesday.

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“It’s very important,” Nicholas Burrett, a shareholder attorney at Levi & Korsinsky LLP, told Reuters.

It is rare for a judge to determine that a defendant intentionally made false statements in a summary judgment before the jury trial begins, Burrett said. The remaining issue, Burrett said, is the damages caused by the intentional false statement to shareholders.

Musk’s lawyer, who has petitioned to overturn the court’s decision, did not immediately respond to a request for comment. Musk said last month that funding had already been secured to take Tesla private in 2018.

Chen’s decision was in line with a complaint from the US Securities and Exchange Commission. In 2018, the securities regulator sued Musk for fraud in connection with the tweets. Musk then settled with the Securities and Exchange Commission, resigned as Tesla’s president, paid the fines and agreed to have some of his tweets approved by a lawyer before they were posted.

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Reporting from Hyunjoo Jin; Editing by Stephen Coates and Will Dunham

Our criteria: Thomson Reuters Trust Principles.

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