Type to search

Musk Vindicated in SolarCity Deal, Slammed Over Tweet Case

The SolarCity case was brought after Tesla shareholders accused Musk of coercing the board into buying the struggling solar panel maker to rescue his investment


Elon Musk
The 2018 agreement required Musk and Tesla to each pay $20 million civil fines and for Musk to step down as Tesla's chairman. Screengrab from CNN.

 

Elon Musk suffered mixed fortunes in US courts on Wednesday after one judge slammed the Tesla chief executive for trying to escape a 2018 settlement with regulators requiring oversight of his tweets, and another saying he did not breach his fiduciary duty for pushing the electric vehicle maker into buying SolarCity in 2016.

The rulings come after Twitter’s board accepted Musk’s $44 billion deal to buy the social media platform.

One dispute stems from the claim by the US Securities and Exchange Commission (SEC) that Musk defrauded investors on August 7, 2018, by tweeting that he had “funding secured” to potentially take the electric car company private at a premium, when in reality a buyout was not close. Tesla shares rose following the tweet.

Musk’s lawyers had sought to terminate the 2018 consent decree that resolved those SEC securities fraud charges, arguing that the regulator’s pursuit of Musk “crossed the line into harassment” and impeded his constitutional right to free speech.

 

SEC Investigation into Tweets

District judge Lewis Liman in Manhattan rejected those arguments as well as Musk’s request to block a separate SEC investigation into tweets that Musk posted last year regarding the sale of some of his Tesla stock.

The 2018 agreement required Musk and Tesla to each pay $20 million civil fines and for Musk to step down as Tesla’s chairman. The consent decree also required Musk to obtain pre-clearance from Tesla lawyers for tweets and other public statements that could be material to Tesla.

The SolarCity case was brought after Tesla shareholders accused Musk of coercing Tesla’s board into buying the struggling solar panel maker to rescue his investment.

“The preponderance of the evidence reveals that Tesla paid a fair price — SolarCity was, at a minimum, worth what Tesla paid for it, and the acquisition otherwise was highly beneficial to Tesla,” the Delaware judge, Joseph Slights of the Court of Chancery.

The shareholders had sought up to $13 billion in damages.

Shares of Tesla were about 2.4% higher at $897.62 and Twitter stock was down 2% at $48.67 in afternoon trading.

 

  • Reuters, with additional editing by George Russell

 

 

READ MORE:

Elon Musk’s SpaceX Sets Up an Office in Ukraine – WSJ

AF TV – What’s next for Twitter after Elon Musk’s Takeover?

Lithium Investors Hope Elon Musk Will Put Money Into Mining

 

George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

logo

AF China Bond