By Hyunjoo Jin and Jody Godoy
(Reuters) – Tesla Inc board members are expected to take the stand on Wednesday to defend against claims that Elon Musk misled investors when he tweeted in 2018 he had “funding secured” to take the company private. The trial in San Francisco federal court is testing whether the world’s second-richest person can be held liable for his sometimes impulsive use of Twitter.
The defendants, which include Musk, Tesla, and current and former directors, are expected to begin calling witnesses on Wednesday.
Current Tesla directors Kimbal Musk, and James Murdoch and Ira Ehrenpreis may testify about their communications with Musk about his proposed buyout, according to court documents. Tesla’s stock surged after Musk’s 2018 tweet that he had “funding secured” to take the carmaker private at a $420 per share price, a premium of about 23% to the prior day’s close. The stock fell as it became clear the buyout would not happen and investors say they lost billions of dollars on their investments in stocks and other Tesla securities. Musk told the jury last week he could have financed the potential deal from existing Tesla investors as well as Saudi Arabia’s sovereign wealth fund, the Public Investment Fund. “Funding was absolutely not an issue,” Musk testified. “It was quite the opposite.” Musk, however, acknowledged he did not have binding agreements with investors for specified amounts, leaving it to the jury to decide if he misled shareholders. A jury of nine will decide whether the Tesla CEO artificially inflated the company’s share price by touting the buyout’s prospects, and if so, by how much. The buyout deal never came together because investors, particularly retail shareholders, expressed their interest in keeping the company public, according to testimony by Musk.
(Reporting by Hyunjoo Jin in San Francisco and Jody Godoy in California; Editing by Noeleen Walder and Bernadette Baum)