Feb 3, 2023
Musk Has a Laugh in Court as Tesla Tweet Fraud Trial Wraps Up
(Bloomberg) -- The jury in Elon Musk’s trial over his tweets 4 1/2 years ago about taking Tesla Inc. private began its deliberations after a lawyer for the chief executive officer argued he’s not a “fire-breathing tweeting monster.”
The nine-member panel left a San Francisco courtroom Friday afternoon to meet privately after hearing almost three weeks of testimony and evidence about whether the controversial tweets in August 2018 were so misleading to investors that they violated securities laws.
Attorney Alex Spiro delivered a spirited defense of his client, his voice thundering in the San Francisco courtroom at times as he described Musk suffering deep pain in childhood. Musk now deserves vindication, the lawyer said.
Lawyers for the investors who sued called Musk a “rich liar, fire-breathing dragon,” Spiro said. “‘Anarchy!’ they yelled out in court.” The testimony Musk’s adversaries presented during the trial was designed to make jurors think: “Bad tweet, bad tweet, fraud tweet,” Spiro said.
But that was all just an act, Spiro said, while urging jurors to believe Musk when he testified that his tweets were “absolutely truthful.”
“This isn’t the bad tweeter trial,” Spiro said. He said that while the initial tweet was “technically inaccurate,” Musk was actively pursuing going private and “funding was not an issue.”
Dressed in a dark suit, Musk sat in the courtroom with his lawyers for about four hours. At one point, he laughed at a comment the judge made to the lawyers, and he later appeared to be listening intently with his elbows on the table and his hands clasped as Spiro addressed the jury.
Early in the day, a lawyer for the investors told the jury that Musk’s out-of-the-blue tweets on Aug. 7, 2018, ran afoul of basic requirements that every public company communicate with the market truthfully and accurately.
“This case is about whether rules that are applied to everyone should also be applied to Elon Musk,” said attorney Nicholas Porritt. “Billionaires don’t get to operate under a different set of rules.”
The issue for the jury is whether Musk’s tweets amount to securities fraud, and whether he should be held liable for potentially billions of dollars in damages. Musk abandoned the take-private plan within a couple of weeks of tweeting about it — but by then, investors allegedly had suffered big losses from fluctuations in Tesla’s stock price.
Investment banking witnesses previously testified that even a week after the tweets, they were still working to figure out how the deal would be structured, including who would pay for it.
Musk’s central defense is that he knew he could raise as much as $60 billion to take Tesla private based on a handshake deal with Yasir Al-Rumayyan, the governor of Saudi Arabia’s Public Investment Fund.
But Porritt told the jury that was a lie.
“The market understood ‘funding secured’ to mean an actual commitment,” he said. In reality, Porritt said, a text exchange between Al-Rumayyan and Musk days after the tweets shows that the commitment didn’t exist — and when the Saudi official said he needed more information, the Tesla CEO tried to bully him.
“Confirm my lie or I’ll never speak to you again,” is how Porritt phrased the ultimatum he says Musk gave Al-Rumayyan.
The investors’ lawyer said the “consequential harm” the tweets did is beyond dispute, pointing the jurors to testimony they heard from expert witnesses that Musk’s pronouncements jolted the market. An economist testified this week that investors lost $12 billion over 10 days after the tweets — a figure that applies to all Tesla investors, which is a larger group than those who are part of the class-action lawsuit.
“The August 7 tweets are like an ice cube dropped in a glass of water,” Porritt said. “It immediately changes the temperature.”
The CEO spent a little more than two days on the witness stand. He said that in addition to an “unequivocal” commitment by Saudi Arabia, he could have sold a stake in his rocket-ship company, SpaceX, to help finance the Tesla take-private transaction.
In re Tesla Inc. Securities Litigation, 18-cv-04865, US District Court, Northern District of California (San Francisco).
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