© Reuters. FILE PHOTO: Tesla CEO Elon Musk and his security detail depart the company’s local office in Washington, U.S. January 27, 2023. REUTERS/Jonathan Ernst/File Photo
By Jody Godoy and Hyunjoo Jin
SAN FRANCISCO (Reuters) -A trial over whether Elon Musk should be liable for tweeting in 2018 about financing for a buyout of Tesla (NASDAQ:) Inc neared its end on Friday, with a lawyer for unhappy shareholders saying the billionaire was not above the law and Musk’s lawyer saying his client was not a “tweeting monster.”
Shareholders accused the Tesla chief executive of misleading them on Aug. 7, 2018, by tweeting that he was considering taking the electric car maker private at $420 per share and had “funding secured.”
The price was a 23% premium to Tesla’s last closing price, valuing the company at $72 billion.
Shareholders also accused Musk of lying when he tweeted later that day that “investor support is confirmed.”
With Musk looking on in a San Francisco federal courtroom, the shareholders’ lawyer Nicholas Porritt said “this case ultimately is about whether rules that apply to everyone else should also apply to Elon Musk,” the world’s second-richest person.
Musk’s lawyer Alex Spiro countered that funding was “not an issue” for a Tesla buyout, saying his client was not the “rich liar” and “fire breathing, tweeting monster” that he said the shareholder lawyers tried to portray.
“This isn’t the ‘bad tweeter’ trial,” Spiro, who also represents Tesla, said in his closing argument.
The trial is a test of whether the billionaire CEO can be held liable for his sometimes impulsive use of Twitter.
A jury of nine will decide whether Musk’s tweets artificially inflated Tesla’s share price by playing up the status of funding for the deal, and if so, by how much.
Investors are seeking billions of dollars in damages from Musk, Tesla and several of the company’s directors.
WHEN ELON TWEETS, PEOPLE LISTEN
Porritt told jurors that Tesla should be liable because it let Musk use Twitter to disseminate corporate information, and recognized that “when Elon tweets about Tesla, people listen.”
Tesla’s share price traded above where it had been before Musk’s tweets for much of the 10-day period covered by the lawsuit, but fell as it became clear no buyout would happen.
Spiro rejected shareholders’ claim that some of that decline stemmed from an Aug. 17, 2018, New York Times story questioning the funding.
He said the decline was prompted by concern about Musk’s health, from the stress of trying to build more Tesla Model 3 sedans.
He also said the “funding secured” tweet was “technically inaccurate” but not fraudulent.
“Who cares about bad word choice?” Spiro said. “Just because it’s a bad tweet doesn’t make it fraud.”
During the three-week trial, jurors heard testimony from witnesses including Tesla directors, Musk’s financial advisers and Musk himself.
Musk testified that he had lined up financing, including a verbal commitment from Saudi Arabia’s sovereign wealth fund, and could have used his stake in SpaceX – a rocket company of which he is also CEO – to fund a deal, but admitted he lacked specific commitments from potential backers.
Porritt tried to highlight the lack of written evidence that funding was available. “Does that sound even remotely credible?” he said.
The defense has also said that in tweeting, Musk was focused on making sure small shareholders had the same information as large investors who knew about the potential buyout.