Lawyers for stockholders of the Austin, Texas-based company
also say in court documents that the judge in the case has ruled that Musk's
tweets about having “funding secured” to take Tesla private were false, and
that his comments also violate a 2018 court settlement with US securities
regulators in which Musk and Tesla each agreed to pay $20 million fines.
Musk, during an interview Thursday at the TED 2022
conference, said he had the funding to take Tesla private in 2018. He called
the Securities and Exchange Commission a profane name and said he only settled
because bankers told him they would stop providing capital if he didn't, and
Tesla would go bankrupt.
The interview and court action came just days after Musk,
the world's richest person, made a controversial offer to take over Twitter and
turn it into a private company with a $43 billion offer that equals $54.20 per
share. Twitter's board on Friday adopted a “poison pill” strategy that would
make it prohibitively expensive for Musk to buy the shares.
In court documents filed Friday, lawyers for the Tesla
shareholders alleged that Musk is trying to influence potential jurors in the
lawsuit. They contend that Musk's 2018 tweets about having the money to take
Tesla private at $420 (roughly Rs. 32,020) per share were written to maniuplate
the stock price, costing shareholders money.
Now, lawyers say Musk is campaigning to influence possible
jurors as the case gets closer to trial.
“Musk's comments risk confusing potential jurors with the
false narrative that he did not knowingly make misrepresentations with his
August 7, 2018 tweets,” the lawyers wrote. “His present statements on that
issue, an unsubtle attempt to absolve himself in the court of public opinion,
will only have a predjudicial influence on a jury."
The lawyers asked Judge Edward M. Chen in San Francisco to
restrain Musk from making further public comments on the issue until after the
trial. Chen gave Musk's lawyers until Wednesday to respond.
Alex Spiro, a lawyer representing Musk, wrote in an email
Sunday that the plaintiffs' lawyers are seeking a big payout. “Nothing will
ever change the truth, which is that Elon Musk was considering taking Tesla
private and could have,” he wrote. “All that's left some half-decade later is
random plaintiffs lawyers trying to make a buck and others trying to block that
truth from coming to light, all to the detriment of free speech.”
But the shareholders' lawyers wrote that Chen already ruled
that Musk's tweets were false and misleading, and “that no reasonable juror
could conclude otherwise.”
Judge Chen's order, issued April 1, was not in the public
court file as of Sunday. Adam Apton, a lawyer for the shareholders, said it was
sealed because it has evidence that Musk and Tesla say is confidential. It will
stay sealed until the parties agree if anything should remain sealed, he wrote
in an email. “Our motion for TRO (temporary restraining order) accurately
desribes the issues decided by the court,” Apton wrote.
After Musk's 2018 tweets, the SEC filed a complaint against
him alleging securities law violations. Musk then agreed to the fine and signed
the court agreement. Part of the agreement says that Musk “will not take any
action or make or permit to be made any public statement denying, directly or
indirectly, any allegation in the complaint or creating the impression that the
complaint is without factual basis.”
If Musk violates the agreement, the SEC may ask the court to
scrap it and restore the securities fraud complaint, the agreement says. A
message was left Sunday seeking comment from the SEC.
Spiro, on behalf of Musk, already has asked a Manhattan
federal court to throw out the agreement. He contends the SEC is using the pact
and “near limitless resources” to chill Musk's speech. Court documents filed by
Spiro say Musk signed the agreement when Tesla was a less mature company and
SEC action jeopardised its financing.
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