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0 Opening arguments are set to begin on Wednesday in a shareholder case against the Tesla CEO, Elon Musk, over a 2018 tweet that declared funding was “secured” to take the company private damaged shareholders.
The case is a rare securities class-action trial, and Musk and his company are bucking the norm of settling claims that clear high legal hurdles, making for a potentially dramatic trial at which Musk himself may testify.
Tesla investor Glen Littleton is seeking “billions” in damages on behalf of shareholders who traded the company’s stock in the days after Musk posted his plan to take the company private on Twitter in August 2018.
A jury of nine, seated on Tuesday, will decide whether the tweets artificially inflated Tesla’s share price by playing up the status of funding for the deal, and if so, by how much.
During Tuesday’s jury selection, some potential jurors described the chief executive, who has gained a reputation for the unpredictable, as “narcissistic”, “unpredictable” “a little off his rocker”.
The defendants, who also include current and former Tesla directors, have said they will argue that the stock price jumped in response to Musk saying he was considering taking the company private, which they say was the case, not his assertion about funding.
US district Judge Edward Chen, who is overseeing the trial, has ruled that Musk’s statements about the status of the deal were false and Musk made them recklessly. The deal did not happen.
Musk’s tweet also attracted the attention of securities regulators, who previously concluded that it was improper and that he was lying. In a settlement, they forced him to pay $40m and required him to step down as Tesla chairman.
While shareholders sue hundreds of companies and their executives for alleged securities fraud every year, very few of those cases make it to trial. The vast majority are either dismissed by courts or settle.
After opening statements, shareholders will be able to start calling witnesses to the stand. Musk may take the stand in the case, according to court documents, along with former board member Larry Ellison, the Oracle co-founder, and current board member James Murdoch, son of the Fox chairman, Rupert Murdoch.
