“The standard practice in corporate acquisitions is you sit tight, you don’t make an announcement until (the deal) has been vetted. “Musk plays by a different rulebook,” said Bartlett. Jessica Levinsonīut UC Berkeley law professor Robert Bartlett said Musk’s way of disseminating corporate news is so far out of the norm that it’s hard to see his tweets as not being very intentional. If they can tie specific losses to those tweets, I think it could add up to potentially billions of dollars. In other testimony Wednesday, Antonio Gracias, who was the lead director on Tesla’s board in 2018, painted Musk’s tweets as a way of meeting “full disclosure” regulations, requiring that all shareholders be given inside company information at the same time. “It blew up my entire vacation,” Fath said. Less than three weeks later, Fath said he was “shocked and surprised” to hear about Musk’s buyout tweet during a vacation he was taking in the Caribbean with his family. Joseph Fath, a T Rowe Price portfolio manager, said he had warned Musk that his tweets were starting to do more harm than good for Tesla, following up with an email imploring him to “remember the golden rule. “If something really upsets you, go for a walk around the factory,” Ron Baron, a major Tesla shareholder, told Musk in a 15 July 2018 email that was displayed as evidence during Wednesday’s trial. Weeks before Musk got into trouble after tweeting about his plans to take Tesla private, company investors had urged him to clamp down on his usage of Twitter, fearing that the comments he was posting were damaging the automaker’s brand as well as the company’s stock price, according to testimony presented Wednesday. “And, if they can tie specific losses to those tweets, I think it could add up to potentially billions of dollars.” ‘Delete, don’t tweet’Īfter three days of sometimes combative testimony from Musk, the trial on Wednesday dove into how Tesla insiders had urged Musk to exercise control of his tweeting habits. “It’s a class action lawsuit and there are a lot of different shareholders who claim they lost money,” she said. “Those are real questions and not necessarily a slam dunk for the plaintiffs,” said Levinson, who nonetheless believes Tesla could face huge damages. Still, the investors’ attorneys must prove that shareholders were harmed by the tweets and then shed light on the question of whether Musk knew he was acting wrongly, which Loyola law professor Jessica Levinson said can be difficult to show. Proving that Musk’s tweets were “material” in causing investors to lose money on Tesla stock is one of three key legal points that attorneys for the investors must make to prove that what happened constituted securities fraud, legal experts said.īut, even before the trial began, the judge had already ruled that Musk’s tweets were both “false” and “reckless”, checking off two of those points in the investors’ favor. “Given how quickly Tesla’s stock price responded to the ‘funding secured’ Tweet, it seems that many investors believed this tweet to be a signal of Musk’s true intention to take the company private at a premium, which had a positive, immediate and sustained impact on the stock price.” “This seems like a weak defense,” based on the timeline evidence entered into the court record by expert witness Michael L Hartzmark, said Josh White, an assistant professor of finance at Vanderbilt University, who is a former financial economist for the US Securities and Exchange Commission. Legal and finance experts observing the case say Tesla’s attorneys face an “uphill battle” to make the claim that his tweet didn’t materially affect the price of the stock, which they say seems to be a key argument in the company’s defense against the shareholders’ charge that Musk cost them “billions” by misleadingly pumping up the stock price. ![]() ![]() ![]() “Just because I tweet something does not mean people believe it or will act accordingly,” Musk told the jury in a San Francisco federal court Friday. This timeline, laid out by an expert witness in a 372-page filing in the case, is likely to be a crucial piece of evidence in the jury trial going on in a San Francisco courtroom, where Musk testified this week that his tweets may not have caused Tesla’s stock price jumps. Within one minute, the price of Tesla’s stock shot up by $8 a share and, by the end of that afternoon, the stock had climbed by more than $20 – a 6% – only to tank 10 days later when it became clear the $72bn deal was not on the horizon at all.
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