Elon Musk “lied” when he claimed funding was “secured” to take Twitter private, according to a lawyer for company investors.
Glen Littleton, a Tesla investor, is suing on behalf of stockholders who traded the company’s stock in the days after Musk announced his proposal to take the company private on Twitter in August 2018.
During opening comments on Wednesday, lead counsel for the investors, Nicholas Porritt, told a San Francisco jury that Musk’s alleged lies caused “regular people” millions of dollars.
“Millions of dollars were lost when his lies were exposed,” he said.
Musk’s lawyer disputed the portrayal, claiming that the billionaire was “serious” about taking the company private in 2018 but ran against shareholder opposition.
“You will come to learn very soon that this was not fraud, not even close,” Musk’s personal attorney Alex Spiro said during opening statements.
According to Spiro, Musk believed money was not an issue and was “taking steps” to make a deal happen.
While the tweets featured “technical inaccuracies,” Musk was concerned that certain investors were aware of his go-private plan and wanted to reach out to the “everyday shareholder” whom he “wanted to protect,” according to Spiro.
“In a rush, he used the wrong words,” he said.
It is a unique securities class action trial. Musk and his company are deviating from the norm by settling claims that clear high legal obstacles, setting up a potentially spectacular trial, with Musk due to testify as early as this week.
A jury of nine will assess whether the tweets increased Tesla’s share price by exaggerating the funding status for the purchase and, if so, by how much.
Littleton testified in court on Wednesday that he began investing in Tesla in 2015 when Musk was “bringing new ideas to life” in the technology business. Musk’s “funding secured” statement is “absolute,” according to the self-employed investor.
Littleton said he rushed to unwind his Tesla options contracts, which had become unprofitable due to the tweet.
The company’s stock price rose following Musk’s Wednesday announcement that he was considering taking Tesla private, which he later confirmed, Spiro said.
According to Spiro, it did not immediately follow Musk’s funding claim.