A federal judge said Tesla Inc and Chief Executive Elon Musk must face a lawsuit claiming they misled shareholders when Musk tweeted that he had secured funding to take his electric car company private in a $72 billion transaction.
FILE PHOTO: Tesla China-made Model 3 vehicles are seen during a delivery event at its factory in Shanghai, China January 7, 2020. REUTERS/Aly Song/File Photo
The judge said shareholders could also try to prove Musk’s tweet was the “proximate cause” of volatility in Tesla’s stock price that caused billions of dollars of losses.The lawsuit arose after Musk stunned investors on Aug. 7, 2018 by announcing on Twitter: “Am considering taking Tesla private at $420. Funding secured.”
Some investors called the tweet a ploy to squeeze short-sellers, long an irritant for Musk, who were betting Tesla’s stock would fall.A month later, he agreed to pay a $20 million civil fine to settle fraud charges by the U.S. Securities and Exchange Commission. Tesla’s stock price has since roughly doubled, and Musk is worth $37.6 billion according to Forbes magazine.
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