Tesla shareholders ask judge to silence Musk in fraud case
A group of Tesla shareholders that sued CEO Elon Musk over some 2018 tweets about taking the company private is asking a federal judge to order Musk to stop commenting on the case.
DETROIT (AP) — A group of Tesla shareholders that sued CEO Elon Musk over some 2018 tweets about taking the company private is asking a federal judge to order Musk to stop commenting on the case.
Attorneys for the Austin, Texas-based company’s shareholders also say in court documents that the judge in the case ruled that Musk’s tweets about having “secured funds” 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 agreed to pay fines of $20 million each.
Musk, during an interview Thursday at the TED 2022 conference, said he had the funds to take Tesla private in 2018. He called the Securities and Exchange Commission an unholy 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 bid to take over Twitter and turn it private with an offer of $43 billion equal to 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 papers filed Friday, attorneys for Tesla shareholders have 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 a share were written to manipulate the share price, costing shareholders money.
Now, lawyers say Musk is campaigning to influence potential jurors as the case moves closer to trial.
“Musk’s comments risk misleading potential jurors with the false narrative that he did not knowingly misrepresent with his August 7, 2018 tweets,” the attorneys wrote. “Your current statements of his on that subject, an unsubtle attempt to absolve himself in the court of public opinion, will only have a detrimental influence on a jury.”
The lawyers asked Judge Edward M. Chen in San Francisco to prevent Musk from making further public comments on the matter until after the trial. Chen gave Musk’s lawyers until Wednesday to respond.
Alex Spiro, an attorney representing Musk, wrote in an email Sunday that the plaintiffs’ attorneys are seeking a large payout. “Nothing will change the truth, which is that Elon Musk was considering taking Tesla private and he could have,” he wrote. “All that’s left half a decade later are random plaintiff attorneys trying to make money and others trying to block that truth from coming out, all to the detriment of free speech.”
But lawyers for the shareholders wrote that Chen has already ruled that Musk’s tweets were false and misleading, and that “no reasonable jury could conclude otherwise.”
Judge Chen’s order, issued on April 1, was not in the public court file as of Sunday. Adam Apton, a lawyer for the shareholders, said it was sealed because he has evidence that Musk and Tesla say is confidential. He will remain sealed until the parties agree if anything should remain sealed, he wrote in an email. “Our TRO (temporary restraining order) motion accurately describes 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 later accepted the fine and signed the court agreement. Part of the agreement says that Musk “will not take any action or make or allow to be made any public statement that directly or indirectly denies any allegation in the complaint or that creates the impression that the complaint has no factual basis.”
If Musk violates the agreement, the SEC can ask the court to dismiss him and reinstate the securities fraud complaint, the agreement says. A message was left Sunday seeking comment from the SEC.
Spiro, on behalf of Musk, has already asked a federal court in Manhattan to throw out the deal. He maintains that the SEC is using the pact and “nearly unlimited resources” to freeze Musk’s speech. Court documents filed by Spiro say Musk signed the deal when Tesla was a less mature company and the SEC action jeopardized funding for him.