SAN FRANCISCO, California (CU)_A shareholder of Tesla Inc has sued chief executive Elon Musk over his Twitter use, which is said to have violated Musk’s 2018 settlement with the US Securities and Exchange Commission.
According to the complaint, which was unsealed in the Delaware Chancery Court, the business magnate’s “erratic” tweets, as well as the failure of directors of Tesla to ensure he complied with the 2018 settlement, have exposed shareholders to losses in billions of dollars.
In his complain, the plaintiff Chase Gharrity highlighted several tweets made by Musk, including one on 1 May last year, in which he said that Tesla’s stock price was “too high”, which led to a more than $13 billion plunge in the electric carmaker’s market value.
Although Tesla’s share price has soared nearly fivefold since the aforementioned tweet, however, the lawsuit was filed over Musk’s actions and the directors’ inactions, which Gharrity says caused “substantial financial harm”. Therefore, the plaintiff demands that defendants pay damages for breaching their fiduciary duty.
In August 2018, Musk said on Twitter that he had “funding secured” to possibly take Tesla private in a $72 billion transaction, which is what led to the SEC settlement. As a result, Musk and his American electric vehicle company each paid $20 million in civil fines, while the company lawyers also agreed to censor Musk’s tweets in advance.
However, the business magnate subsequently published an unvetted Tweet about Tesla’s vehicle production forecast, which prompted the 2018 settlement to be amended in order to clarify when pre-approvals were required. Moreover, in April last year, a San Francisco federal judge said Tesla and its chief executive must face a lawsuit over Musk’s tweet about going private, which was determined to have defrauded shareholders. However, that case still remains pending.
