Tesla shareholders ask judge to silence Musk in fraud case

A group of Tesla shareholders is suing CEO Elon Musk over 2018 tweets about taking the company private asks a federal judge to order Musk to stop commenting on the case

DETROIT — A group of Tesla shareholders is suing CEO Elon Musk over 2018 tweets regarding the company’s privatization are asking a federal judge to order Musk to stop commenting on the matter.

Attorneys for the shareholders of the Austin, Texas-based company also said in court papers that the judge handling the case ruled that Musk’s tweets about “secured funding” to take Tesla private were false and that his comments also violated a 2018 legal settlement with US securities regulators in which Musk and Tesla each agreed to pay fines of $20 million.

Musk, during a Thursday interview at the TED 2022 conference, said he had the funding to take Tesla private in 2018. He called the Securities and Exchange Commission a lay name and said he didn’t settle. that because the bankers told him they would stop providing capital if he didn’t, and Tesla would go bankrupt.

The interview and lawsuit came just days after Musk, the world’s richest person, made a controversial bid to take over Twitter and turn it into a private company with a bid of $43 billion. , or $54.20 per share. Twitter’s board on Friday adopted a “poison pill” strategy that would make buying the shares prohibitively expensive for Musk.

In court documents filed Friday, attorneys for Tesla shareholders alleged that Musk was trying to influence potential jurors in the trial. They argue that Musk’s 2018 tweets about having the money to take Tesla private at $420 a share were written to manipulate the stock price, costing shareholders money.

Now lawyers say Musk is campaigning to sway potential jurors as the case moves closer to trial.

“Musk’s comments risk confusing potential jurors with the false narrative that he did not knowingly make false statements with his August 7, 2018 tweets,” the attorneys wrote. “His current statements on this matter, an unsubtle attempt to absolve himself in the court of public opinion, will only have a detrimental influence on a jury.”

The attorneys asked Judge Edward M. Chen in San Francisco to restrain Musk from making any further public comments on the matter until after the trial. Chen gave Musk’s attorneys until Wednesday to respond.

Alex Spiro, an attorney representing Musk, wrote in an email Sunday that the plaintiffs’ attorneys were seeking a large payout. “Nothing will ever change the truth that Elon Musk was considering taking Tesla private and could have,” he wrote. “All that’s left half a decade later are random plaintiffs’ lawyers trying to make money and others trying to stop this truth from coming to light, all at the expense of the freedom of expression.”

But attorneys for the shareholders wrote that Chen had already ruled that Musk’s tweets were false and misleading, and “no reasonable juror could conclude otherwise.”

Judge Chen’s order, issued on April 1, was not in the court’s public record on Sunday. Adam Apton, an attorney for the shareholders, said it was sealed because it contains evidence Musk and Tesla say is confidential. It will remain sealed until the parties agree if anything should remain sealed, he wrote in an email. “Our TRO (temporary restraining order) motion accurately outlines the issues determined by the court,” Apton wrote.

After Musk’s tweets in 2018, the SEC filed a lawsuit against him alleging securities law violations. Musk then accepted the fine and signed the court agreement. Part of the agreement states that Musk “will not take any action or make or permit to be made any public statement that directly or indirectly denies any allegation contained in the complaint or creates the impression that the complaint is without factual basis.” “.

If Musk violates the agreement, the SEC can ask the court to strike it down and reinstate the securities fraud claim, the agreement says. A message was left Sunday seeking comment from the SEC.

Spiro, on behalf of Musk, has already asked a federal court in Manhattan to throw out the deal. He argues that the SEC is using the pact and “almost limitless resources” to chill Musk’s speech. Court documents filed by Spiro indicate that Musk signed the deal when Tesla was a less mature company and the SEC action compromised its funding.

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