Opening statements begin in Elon Musk Tesla tweets trial

The category-action lawsuit was filed on behalf of traders who owned Tesla inventory for a 10-day interval in August 2018.(Trevor Cokley / USAF)

SAN FRANCISCO (AP) — Opening statements start Wednesday in a trial that may decide whether or not Tesla CEO Elon Musk cheated traders by asserting in 2018 tweets that he had lined up financing to take the electrical automaker personal.

A nine-person jury was seated Tuesday for the case that's anticipated to incorporate testimony from Musk to elucidate his considering whereas engaged in one among his favourite actions — tweeting on the Twitter service that he now owns.

Musk’s tweets fueled a rally within the firm’s inventory value that abruptly ended every week later after it turned obvious that he didn't have the funding for a buyout in spite of everything. Buyers then sued him, saying that Tesla shares wouldn't have swung so extensively in worth if he had not dangled the prospect of shopping for the corporate for $420 per share.

Musk’s tweet additionally attracted the eye of securities regulators, who concluded that it was improper and that he was mendacity. In a settlement, they compelled him to pay $40 million and required him to step down as Tesla chairman.

He has since contended that he entered the settlement underneath duress and maintains that he believed he had locked up monetary backing for the buyout throughout conferences with representatives from Saudi Arabia’s Public Funding Fund.

Even whereas he has been making main modifications at Twitter, Musk continues to function CEO at Tesla and derives most of his wealth and fame from the corporate.

The trial hinges on an Aug. 7, 2018, tweet during which Musk claimed he had lined up financing to pay for a $72 billion buyout of Tesla, which he then amplified with a follow-up assertion that made a deal appear imminent.

However the buyout by no means materialized, and now Musk must clarify his actions underneath oath in a federal courtroom in San Francisco. The category-action lawsuit was filed on behalf of traders who owned Tesla inventory for a 10-day interval in August 2018.

The trial’s final result might activate the jury’s interpretation of Musk’s motive for the tweets, which U.S. District Decide Edward Chen has already determined had been false.

The choose dealt Musk one other setback on Friday, when he rejected Musk’s bid to switch the trial to a federal courtroom in Texas, the place Tesla moved its headquarters in 2021. Musk had argued that adverse protection of his Twitter buy had poisoned the jury pool within the San Francisco Bay Space.

The problem of discovering jurors with out robust emotions about Musk turned evident throughout Tuesday’s painstaking choice course of.

At one level, the choose flagged some potential jurors who had expressed excessive misgivings or enthusiasm about Musk in pretrial questionnaires. Seven jurors had been questioned individually, away from the remainder of the jury pool, to cut back the possibilities of influencing the opinions of others within the courtroom.

Chen and attorneys for each the shareholders and Musk ended up grilling seven of these jurors, who variously described Musk as “smug,” “narcissistic,” “unpredictable,” “a bit off his rocker,” “a mercenary” and “a genius.”

Musk’s management of Twitter — the place he has gutted the employees and alienated customers and advertisers — has confirmed unpopular amongst Tesla’s present stockholders, who're fearful that he has been devoting much less time to automaker at a time of intensifying competitors.

These considerations contributed to a 65% p.c decline in Tesla’s inventory final 12 months that worn out greater than $700 billion in shareholder wealth — way over the $14 billion swing in fortune that occurred between the corporate’s excessive and low inventory costs from Aug. 7 to Aug. 17, 2018, the interval lined within the lawsuit.

Tesla’s inventory has cut up twice since then, making that $420 value value $28 on adjusted foundation now. The shares closed final week at $122.40, down from the corporate’s November 2021 split-adjusted peak of $414.50.

After Musk dropped the concept of a Tesla buyout, the corporate overcame a manufacturing drawback, leading to a fast upturn in automotive gross sales that brought on its inventory to soar and made Musk the world’s richest individual till he purchased Twitter. Musk dropped from the highest spot on the wealth listing after a inventory market backlash to his dealing with of Twitter.

The trial is probably going to supply insights into Musk’s administration type, on condition that the witness listing consists of a few of Tesla’s present and former prime executives and board members, together with luminaries resembling Oracle co-founder Larry Ellison and James Murdoch, the son of media mogul Rupert Murdoch.

The drama might make clear Musk’s relationship along with his brother, Kimbal, who can be on the listing of potential witnesses. The trial is anticipated to final till early February.