Court says Musk recklessly tweeted that ‘funding secured’ to take Tesla private

SAN FRANCISCO (Reuters) – A court said Elon Musk’s 2018 tweets about securing funding to take private Tesla were inaccurate and reckless, saying there was “nothing concrete” about funding from Saudi Arabia’s sovereign wealth fund at the time.

The decision of US District Judge Edward Chen of San Francisco is a major victory for investors who claim that Musk has inflated stock prices by making false and misleading statements, causing billions of dollars in losses.

In 2018, Musk met with representatives of the Public Investment Fund in Saudi Arabia and had a discussion about giving Tesla a private company, but the evidence shows that “there was nothing concrete about the funding coming from the PIF,” Al-Kadhi wrote.

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Instead, discussions between Tesla and the Public Investment Fund were clearly in their initial phase.

“There is no reasonable jury to find that Mr. Musk did not act recklessly given his apparent knowledge of the discussions,” he said.

He said details such as the total amount of financing needed to take Tesla private or the price to be paid for Tesla shares were not discussed.

The summary ruling, issued on April 1, was sealed for more than a month before becoming available to the public on Tuesday.

“It’s very important,” Nicholas Borrett, a shareholder attorney at Levi & Korsinsky LLP, told Reuters.

He said plaintiffs in the class action are getting an expedited verdict on perjury and flag before going to a jury trial, scheduled for January.

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The remaining issue, he said, is the damages caused by the intentional false statement to the shareholders.

The judge refused to give shareholders a summary ruling on the question of whether the alleged false statements actually affected Tesla’s stock prices.

Musk’s lawyer, who has petitioned to overturn the court’s decision, was not immediately available for comment. Musk recently said that funding has already been secured to take Tesla private in 2018.

The latest ruling aligns with a complaint from the US security regulator who sued Musk for tweet fraud in 2018. He settled with the US Securities and Exchange Commission, resigned as Tesla’s president, paid fines and agreed to the approval of a lawyer. Some of his tweets before they were posted.

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Reporting from Hyunjoo Jin; Editing by Stephen Coates

Our criteria: Thomson Reuters Trust Principles.

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