Judge Says Musk Made Knowingly False Statements

Next, a jury will need to decide how much damage he caused
By Mike L. Ford,  Newser Staff
Posted May 12, 2022 4:59 AM CDT
Judge Rules Musk Tweets 'Reckless and Inaccurate'
Tesla CEO Elon Musk arrives on the red carpet for the Axel Springer media award, in Berlin, Germany, Tuesday, Dec. 1, 2020.   (Britta Pedersen/Pool via AP, File)

(Newser) – In a pre-trial ruling, a federal judge in California has determined that Elon Musk was "inaccurate and reckless" when—out of the blue one summer morning in 2018—he tweeted, "Am considering taking Tesla private at $420. Funding secured.” Musk had indeed talked to Saudi investors about the idea, but US District Judge Edward Chen said there was "nothing concrete" on which to base such a statement. The Guardian reports that Chen’s decision "represented a major victory for investors in a lawsuit accusing the world’s richest person of inflating stock prices by making false and misleading statements."

The judge rendered his decision back on April 1, but it was only made public this week. An attorney for disgruntled shareholders said it was a "hugely significant" and rare decision, coming before the jury trial even starts. Per the Guardian, although Chen "granted the shareholders summary judgment on the issue of whether Musk knowingly made false statements," he did not rule on whether or to what extent Musk’s statements impacted Tesla shares. Musk’s attorneys are appealing, but as things stand, jurors will only need to decide what damages Musk caused.

Tesla was in a different situation back then, under pressure from negative publicity and short sellers. Musk insisted he was only doing what was best for the company, but the initial tweet caused wild price fluctuations for days, per CleanTechnica reporting at the time; many investors lost billions in the shuffle. While some analysts found Musk’s tweet bizarre and gave a wink to the 420 reference, others—including the SEC—saw a blatant attempt at stock manipulation. Musk was investigated for fraud and settled on a $20 million fine and agreed to step down as Tesla chairman, per the Hill, which reported last month on a separate judgment by Chen, saying Musk needn’t be bound by a gag order forbidding him to discuss the case publicly before it goes to trial next year. (Read more Elon Musk stories.)

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