U.S. District Judge Edward M. Chen recently ruled in San Francisco that Musk’s infamous “funding secured” tweet from 2018 was false and misleading. The ruling is part of a civil class-action lawsuit brought against Tesla CEO Elon Musk by shareholders.
The Los Angeles Times reports that Tesla CEO Elon Musk is facing a civil class-action shareholder lawsuit that will proceed after U.S. District Judge Edward M. Chen in San Francisco recent ruled that Musk’s infamous “funding secured” tweet in which he promised to take Tesla private at $420 a share was false and misleading.
The suit alleges that investors lost huge amounts of money as the stock skyrocketed on Musk’s funding-secured claim, then crashed when Musk couldn’t verify that the tweet was true. In a 41-page ruling, Chen wrote: “The rise and fall of Tesla’s stock prices corroborated with the timing of the alleged false and misleading statements, all of which occurred within a less-than-two-week period, and which suggests Mr. Musk’s false statements were the proximate cause.”
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Discussing whether Musk’s tweet was representing Tesla, Chen wrote that Musk “was in fact speaking as the CEO of Tesla within the scope of his authority,” and noted that “in November 2013, Tesla formally notified investors that it would use Musk’s Twitter account as a formal means of communication to convey ‘additional information’ about the company to investors.”
In relation to whether Musk had a vendetta against short-sellers, providing a motive for his tweet, the judge wrote that “even if Mr. Musk stood to gain no direct financial benefit from the false statement, he stood to gain satisfaction from watching the short-sellers lose on their investments, sellers against whom he allegedly harbored animosity.” Among the evidence for this, the judge cited a tweet from Musk posted weeks before the 420 tweet in which he stated: “Oh and uh short burn of the century comin soon. Flamethrowers should arrive just in time.”
Three days after the 420 tweet, Musk tweeted: “Short shorts coming soon to Tesla merch[andise.]”
Short shorts coming soon to Tesla merch
— Elon Musk (@elonmusk) August 11, 2018
When the trial will commence is uncertain due to the current Wuhan coronavirus pandemic. Another major class-action shareholder lawsuit against Musk has also been delayed, relating to Tesla’s 2016 acquisition of Solar City which was marked by possible fraud and seemingly engineered to rescue Musk and other family members who held major stakes in Solar City as the company’s finances fell apart.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan or contact via secure email at the address email@example.com