A nine-person jury was seated Tuesday to hear a trial that will determine whether Tesla CEO Elon Musk misled investors by saying in 2018 tweets that he was lining up financing to take the electric automaker private.
The five-hour proceeding set the stage for opening statements to begin Wednesday in the case, which is expected to include testimony from Musk to explain his thinking while engaging in one of his favorite activities — driving. – tweet at Twitter service that is now his.
In the case of Tesla, Musk’s tweets fueled a rally in the company’s stock price that ended abruptly a week after it was revealed he did not have the funds for a subsequent buyout. Investors sued him, saying that Tesla’s shares would not have increased in value if he had not dangled the possibility of buying the company for $420 per share.
Musk’s tweet also attracted the attention of securities regulators, who concluded that it was incorrect and that he was lying. In a settlementthey forced him to pay $40 million and demanded that he step down as chairman of Tesla.
Since then, he has argued that he entered into the settlement under duress and maintains that he believes he locked in financial support for the buyout during meetings with representatives from Saudi Arabia’s Public Investment Fund.
Even while he made big changes in TwitterMusk continues to serve as Tesla’s CEO and derives most of his wealth and fame from the company.
The test depends on a August 7, 2018, tweet in which Musk admitted that he had lined up financing to pay for the $72 billion purchase of Tesla, which he raised. with a follow-up statement which makes a deal seem imminent.
But the purchase never happened, and now Musk must explain his actions under oath in a federal court in San Francisco. The class-action lawsuit was filed on behalf of investors who owned Tesla stock during a 10-day period in August 2018.
The outcome of the trial could change the jury’s interpretation of Musk’s motive for the tweets, which has already been made by US District Judge Edward Chen. decided to lie.
The judge gave Musk another setback on Friday, when he rejected Musk’s offer to move the test to the federal court in Texas, where Tesla moved its headquarters in 2021. Musk argued that the negative coverage of his purchase on Twitter poisoned the jury pool in the San Francisco Bay Area.
The challenge of finding jurors without strong feelings about Musk became apparent during Tuesday’s intricate selection process.
At one point, the judge flagged some prospective jurors who expressed too much skepticism or enthusiasm about Musk in pre-trial questions. Seven jurors were questioned individually, away from the rest of the juror group, to reduce the chances of influencing the opinions of others in the courtroom.
Chen and lawyers for shareholders and Musk ended up grilling seven of the jurors, who variously described Musk as “arrogant,” “narcissistic,” “unpredictable,” “a little off his rocker,” ” a mercenary” and “a genius. .”
Musk’s leadership at Twitter – where he belongs the staff were beaten and isolated users and advertisers – proved unpopular with Tesla’s current stockholders, who worried that he was spending too little time at the automaker at a time when competition was intensifying.
Those concerns contributed to a 65% percent decline in Tesla stock last year that wiped out more than $700 billion in shareholder wealth — more than the $14 billion change in fortunes that occurred between high and low prices of the company’s stock from August 7 to August 17, 2018, the period covered by the lawsuit.
Tesla stock has split twice since then, making that $420 price worth $28 on an adjusted basis today. Shares closed last week at $122.40, off the company’s November 2021 split-adjusted peak of $414.50.
After Musk dropped the idea of a purchase of Tesla, the company overcame a production problem, resulting in a rapid increase in sales of cars that caused its stock to rise and made Musk the richest man in the world until he bought Twitter. Musk has fallen from the top spot on the wealth list after a stock market backlash over his handling of Twitter.
The trial is likely to provide insights into Musk’s management style, as the witness list includes some of Tesla’s current and former top executives and board members, including luminaries such as Oracle co-founder Larry Ellison and James Murdoch, the son of media mogul Rupert Murdoch.
The drama could shed light on Musk’s relationship with his brother, Kimbal, who is also on the list of potential witnesses. The trial is expected to last until early February.
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