Seeing how the share price jumped dramatically, it seemed like a no-brainer. Though perhaps there’s some splitting of hairs over how much of the rise was from him saying he was “considering” taking it private and how much was from his assurance that he had already lined up financing.
Musk’s attorney acknowledged that the words were “technically inaccurate” but not insincere. Musk believed his agreement was more firm than it was, he said. And he had other options for financing a take-private transaction, though he didn’t choose to use them.
I’m still gobsmacked that “using the wrong words” can be a winning defense strategy. I mean, sure, anyone can misspeak — it happens all the time. But he wrote and published it — that’s what Twitter is, a micropublishing site. And he seemed to mean what he said: He went back and tweeted later that “investor support is confirmed.” It’s not like in conversation, he accidentally forgot to say “almost” or “I think,” which are important qualifiers.
“Important” as in “material” — something that legitimately matters to investors, because it matters to the future of the business. “I think I have the funding” or “I could almost pull off” taking it private would strike a significantly different tone than the words he wrote.
Then again, maybe it was all just a pot joke, because his suggested price was $420 a share. And maybe investors should’ve known to not take him or his comments seriously.
Musk told the jury that his intent was to give retail investors the same information that others might have secretly. Which would be logical and even noble, if the information were accurate. But when the level-up sharing is of misinformation, that actually seems worse.
A lot has been made of Musk’s high tolerance for risk and his strategy of pushing cases to trial, rather than settling. I can’t help but wonder if his star power played a role in his victory.
I wasn’t in the room, so I can’t say if the jury chose to nullify the facts or the law because they were charmed by him or because they otherwise sympathized with the immigrant innovator who has sparked an EV revolution and didn’t want to see him punished.
Perhaps they were just starstruck. Or maybe they were just unimpressed by the plaintiffs’ argument, which may have been undersold in light of the seeming obviousness of the case.
The jury foreperson, according to The Wall Street Journal, said “There was nothing there to give me an ‘aha’ moment.”
Too bad that an examination of the accounting definition of “material” doesn’t generate profound drama.
The jury deliberated for only about two hours before deciding unanimously that the shareholders’ claim was pointless — that Musk’s statements, as CEO of a publicly traded company, weren’t material in their inaccuracy.
