Elon Musk will go on trial on Tuesday for alleged stock fraud in relation to a tweet he sent in 2018 in which he said he was considering delisting Tesla from the stock market.
The procedure, which is taking place in San Francisco (California, USA), is the result of a class action lawsuit filed by Tesla shareholders who claim that Musk manipulated the market with his message, causing large movements in the company’s share price that cost them a lot of money.
Already in 2018, Musk was charged with fraud by the Securities and Exchange Commission (SEC) for his tweets on Twitter, and the entrepreneur agreed to pay a $ 20 million fine and step down as chairman of the company’s board of directors for at least three years, though he remained CEO.
The SEC accused Musk in its complaint of falsely claiming that he could delist Tesla from the stock market by securing “a multibillion-dollar transaction” and only in the absence of a shareholder vote.
“The reality and truth is that Musk had not even discussed, let alone confirmed, the key terms of the deal with any potential funding source,” according to the SEC document.
“Musk’s false and misleading public statements caused significant disruption to Tesla’s stock in the marketplace, resulting in harm to investors,” the statement continued.
Musk, for his part, has insisted that he had an agreement with the Saudi sovereign wealth fund to support his plan to delist the company by purchasing its shares at $420, which would have valued it at approximately $72 billion.
The trial, which begins on Tuesday, will be decided by a jury, and the defense recently attempted but failed to move it from California to Texas.
According to Musk’s lawyers, a fair trial will be impossible in San Francisco because of the city’s “local negativity” toward the tycoon, particularly after his purchase of
Twitter and decision to fire thousands of its employees.
However, the judge rejected his arguments, and the trial will proceed as planned in the Californian city where Tesla had its headquarters until Musk relocated it to Texas.