A US judge ruled that Elon Musk’s 2018 tweets that he had secured funding to privatize electric carmaker Tesla were inaccurate and reckless, saying there was “nothing concrete” about funding the fund. sovereign wealth of Saudi Arabia at the time.
The pretrial decision by San Francisco-based US District Judge Edward Chen represented a major victory for investors in a lawsuit that accuses the world’s richest person of inflating stock prices by making false statements and misleading, causing billions of dollars in damage.
Chen granted shareholders summary judgment on the question of whether Musk knowingly made false statements, but refused to grant them summary judgment on the question of whether these statements actually affected Tesla stock prices.
In 2018, Musk met with representatives of the Saudi Arabian Public Investment Fund and discussed the privatization of Tesla, but the evidence showed that “there was nothing concrete about the funding coming from the PIF,” the judge wrote.
“Rather, the discussions between Tesla and the PIF were clearly in the preliminary stage,” Chen said.
“No reasonable jury could find that Mr. Musk did not act recklessly given his clear knowledge of the discussions,” the judge added.
Chen said details such as the total amount of funds needed to take Tesla private or the price to be paid for Tesla shares were not discussed.
The summary judgment, issued on April 1, was sealed for more than a month before it was made public on Tuesday.
“It’s hugely significant,” shareholder attorney Nicholas Porritt, a partner at Levi & Korsinsky LLP, told Reuters.
Porritt said it is rare for a judge to find that a defendant knowingly made false statements in a summary trial before a jury trial begins. The remaining issue is what damage the intentionally false statement has caused shareholders, Porritt said.
Musk’s attorney, who has filed motions to vacate the court decision, did not immediately respond to a request for comment. Musk said last month that he actually secured the funding to take Tesla private in 2018.
Chen’s ruling was in line with a complaint from the US Securities and Exchange Commission. The securities regulator in 2018 sued Musk for fraud related to the tweets. Musk then settled with the SEC, resigning as chairman of Tesla, paying fines and agreeing to have some of his tweets approved by a lawyer before posting them.