Elon Musk was depicted on Wednesday as either a liar who callously jeopardized the savings of “regular people" or a well-intentioned visionary as attorneys delivered opening statements at a trial focused on a Tesla buyout that never happened, reports UNB.
Lawyers on opposing sides drew the starkly different portraits of Musk for a nine-person jury that will hear the three-week trial. The case is focused on two August 2018 tweets that the billionaire posted on Twitter, which he now owns.
The tweets indicated that Musk had lined up the financing to take Tesla private at a time when the automaker's stock was slumping amid production problems.
The prospect of a $72 billion buyout fueled a rally in the company’s stock price that abruptly ended a week later after it became apparent that he did not have the funding to pull off the deal after all. Tesla shareholders then sued him, saying that Tesla shares would not have swung so widely in value if he had not dangled the idea of buying the company for $420 per share.
Nicholas Porritt, a lawyer representing Glen Littleton and other Tesla shareholders in the class-action case, promptly vilified Musk as he addressed jurors.
“Why are we here?” Porritt asked. “We are here because Elon Musk, chairman and chief executive of Tesla, lied. His lies caused regular people like Glen Littleton to lose millions and millions of dollars." He also asserted that Musk's tweet also hurt pension funds and other organizations that owned Tesla stock at the time.
Musk's lawyer, Alex Spiro, countered that the run-up in Tesla's stock after the tweet mostly reflected investors' belief in Musk's ability to pull off stunning feats, including building the world's largest electric automaker while also running SpaceX, a maker of rocket ships.
“Mr. Musk tries to do things that have never been done before. Everyone knows that," Spiro told the jury.
Spiro added that Musk had been in advanced talks with representatives from Saudi Arabia’s Public Investment Fund to take Tesla private.
“He didn't plan to tweet this," Spiro said of Musk's Aug. 7, 2018, statement at the heart of the trial. “It was a split-second decision" aimed at being as transparent as possible about the discussions with the Saudi fund about a potential deal.
After saying “funding secured" for the buyout, Musk followed up with another tweet that suggested a deal was imminent.
Littleton, a 71-year-old investor from Kansas City, Missouri, was the first witness called to the stand. He said Musk's claim about the financing alarmed him because he had purchased Tesla investments designed to reward him for his belief that the automaker's stock would eventually be worth far more than the $420.
He said he sold most of his holdings to cut his losses but still saw the value of his Tesla portfolio plunge by 75 per cent.
“The damage was done," Littleton lamented. “I was in a state of shock.”
Littleton's frustration escalated in October 2018, when he lashed out at Tesla for late deliveries on vehicles for some of his nieces and nephews. That led him to become a lead investor in the lawsuit.
“I still believe in Tesla to this day. I do,” Littleton said.
During cross-examination, a lawyer for Tesla's board of directors repeatedly questioned whether Littleton had legitimate reason to believe a buyout was inevitable, but the investor remained steadfast even while seeming confused at times.
“'Funding secured' was the only thing that mattered to me,” Littleton testified. “That was such a defining statement."
Musk's 2018 tweets attracted the attention of securities regulators, who concluded that they were improper and that he was lying. In a settlement, they forced him to pay $40 million and required him to step down as Tesla chairman.
U.S. District Judge Edward Chen, who is presiding over the trial, ruled that the shareholders' lawyers can't mention that settlement in the case.
Bd-pratidin English/Tanvir Raihan
