Tesla shares surged as much as 13 percent after the tweet, and trading was temporarily halted. But as questions swirled about Musk’s statements in the following hours and days, the stock bounced the other way. The plaintiffs are a mix of long and short sellers. The latter group have been a frequent target of Musk’s ire.
The U.S. Securities and Exchange Commission was quick to open an investigation, questioning Musk, Tesla’s board and other executives. Musk and Tesla agreed to pay $40 million to resolve the probe without admitting or denying wrongdoing. The regulator also imposed an unusual condition that forbids the billionaire CEO from tweeting about Tesla’s financial condition without advance approval from a company lawyer.
One point of contention in the shareholder case is Musk’s email to employees that the company posted on its blog less than three hours after the tweet.
Tesla says that message demonstrates Musk’s “long-standing interest” in taking the company private.
But the suing investors claim — just like the SEC — that Tesla’s chief financial officer and other officers came up with the idea of “expounding on Musk’s initial tweet” in the blog.
“Tesla and Musk worked hand-in-hand in publishing and republishing the false and misleading information,” the investors allege.
The case is In re Tesla Inc. Securities Litigation, 18-cv-04865, U.S. District Court, Northern District of California (San Francisco).
