Introduction
In September 2018, Elon Musk tweeted that he had secured funding to take Tesla private. But it turned out there was no such deal, and now he’s being sued for $1.9 million because of his false statement.
Elon Musk and Tesla are being sued by a pair of investors, who say that the company’s CEO made false comments on Twitter which hurt the company’s share prices.
The investors are suing for damages, alleging that they lost money on their shares after Musk tweeted “Teslaquila” and then later deleted the tweet. They claim that the false statements caused a drop in share price.
In response, Musk said: “The actions of these individuals are very unfortunate, as they have no right to single-handedly seek this kind of action against us.” He added that he would be “happy to buy any Tesla drink for anyone who wants one.”
The lawsuit, filed in the U.S. District Court for the Northern District of California, accuses Musk and Tesla of negligence and any number of securities fraud violations as well as aiding and abetting each other’s false statements.
The lawsuit, filed in the U.S. District Court for the Northern District of California, accuses Musk and Tesla of negligence and any number of securities fraud violations as well as aiding and abetting each other’s false statements.
The lawsuit seeks to recover $1 million from Musk for each time he posted “false and misleading” information about taking Tesla private at $420 per share; an additional $20 million from him; another $10 million from Tesla; plus interest and costs associated with bringing the case against both defendants.
In September 2018, Musk tweeted that he had funding secured to take Tesla private at $420 a share (or $72 billion).
On September 23, 2018, Musk tweeted that he had funding secured to take Tesla private at $420 a share (or $72 billion). The tweet caused the share price to rise by as much as 7 percent in after-hours trading. However, no funding was in place and Musk later admitted he was smoking marijuana when he sent the tweet.
The SEC alleges that Musk omitted material facts when issuing his tweets about taking Tesla private: “Musk knew or was reckless in not knowing that each of these statements was false and/or misleading because he did not have an adequate basis in fact for his assertions,” according to court documents filed Thursday morning by federal prosecutors.[1]
At the time, Musk allegedly knew that he did not have in place a confirmed financing plan or bank commitment when he posted his tweet.
According to the lawsuit, Musk allegedly knew that he did not have in place a confirmed financing plan or bank commitment when he posted his tweet.
The complaint also alleges that: “the SEC has made it clear that it will not hesitate to enforce its fraud laws against companies and individuals who make false statements about their business or have a duty to disclose material facts but fail to do so.”
The plaintiffs argue that if they had known that no such deal existed at the time of Musk’s tweet, they would have sold their shares or would not have purchased them in the first place.
The lawsuit is about the false statement made on Twitter. The plaintiffs are suing for damages and they are asking for $1.9 million in damages. They are shareholders in the company and they say that if they had known there was no such deal at the time of Musk’s tweet, they would have sold their shares or not purchased them in the first place.
The SEC has opened an investigation into Musk’s tweets but hasn’t taken any action yet against him or Tesla itself (although one person did sue). In response to this latest lawsuit, his spokesperson released a statement saying: “This unjustified action by lawyers who seek out publicity will be defended vigorously.”
Elon musk is being sued for a million dollars
A lawsuit is a legal case that’s filed in court. The person or group filing the suit is called the plaintiff; they’re seeking compensation for damages or wrongs done to them by another party, who is called the defendant.
The charges against Elon Musk are:
- Breach of contract (for failing to tweet as promised)
- Failure to perform under an oral contract (for not tweeting as promised)
The penalty for these charges is up to $1.9 million in damages–but Musk could get out of paying anything at all if he wins his case!
Conclusion
The lawsuit is seeking $1.9 million in damages for each of the two plaintiffs, or a total of $3.8 million. The plaintiffs are also asking the court to order Musk and Tesla to pay punitive damages because they believe the company’s actions were maliciously intended to harm investors.
