A lawyer for Tesla investors on Wednesday said that the company's chief executive Elon Musk “lied” when he tweeted in 2018 that funding was “secured” to take the company private.
The billionaire businessman's comments caused “regular people” to lose millions “when his lies were exposed”, Nicholas Porritt, lead lawyer for the investors, told a San Francisco jury in opening arguments.
Mr Musk is the target of a lawsuit over an August 7, 2018, tweet in which he claimed he had lined up financing to pay for a $72 billion buyout of Tesla.
He then amplified the comment with a follow-up statement that made a deal seem imminent, though no deal ever came about.
In the rare securities class action trial, Mr Musk and his company are bucking the norm of settling claims that clear high legal hurdles, making for a potentially dramatic trial at which the billionaire himself is expected to take the stand.
Tesla investor Glen Littleton is seeking damages on behalf of shareholders, including current and former Tesla directors, who traded the company's stock and lost money during the wild stock swings in the 10 days after the tweets were posted.
For markets to operate normally and fairly, it is “critical that he is held, and the company is held liable”, Mr Porritt said.
A nine-member jury will decide whether the tweets artificially inflated Tesla's share price by playing up the status of funding for the deal, and if so, by how much.
Celebrities who've quit Twitter after Elon Musk takeover - in pictures
-
Gigi Hadid has deactivated her Twitter account following Elon Musk's takeover of the platform, saying 'it's becoming more and more of a cesspool of hate and bigotry with the new leadership'. AFP -
Whoopi Goldberg said she was getting off Twitter because 'it’s so messy'. AP -
Producer Shonda Rhimes quit the platform days after Elon Musk took over. Reuters -
Actor and filmmaker Alex Winter's account has also been deactivated. AFP -
Grammy-winning singer Sara Bareilles said Twitter was no longer for her. AP -
Actor Amber Heard, who once dated Elon Musk, has also deactivated her account. AP -
Singer Toni Braxton, who has also quit, said she was not comfortable with 'hate speech under the veil of free speech'. Alamy Stock Photo -
Comedian Kathy Griffin's Twitter account was suspended after she changed her name to 'Elon Musk'. GC Images -
'Avengers' star Mark Ruffalo has pleaded with Elon Musk to 'get off Twitter and get on with running Tesla and SpaceX'. AP
US District Judge Edward Chen, who is overseeing the trial, has ruled that Mr Musk's statements about the status of the deal were false and that they were made recklessly.
While shareholders sue hundreds of companies and their executives for alleged securities fraud every year, very few of those cases make it to trial. The vast majority are either dismissed by courts or settle.
Mr Musk’s tweet also attracted the attention of securities regulators, who concluded that it was improper and that he was lying. In a settlement, he was forced to pay $40 million and was required to step down as Tesla's chairman.
After opening statements, shareholders will be able to start calling witnesses, one of which is expected to be Mr Musk's brother Kimbal.
The trial is expected to last until early February.
Elon Musk's most controversial tweets
-
After months of negotiations, Tesla chief executive Elon Musk finally purchased Twitter on October 27. AFP -
The billionaire took control of microblogging platform and fired its top executives, including chief executive Parag Agrawal, left, as well as the company's chief financial officer and its head of legal policy, trust and safety. AFP -
Elon Musk entering Twitter headquarters carrying a sink through the lobby area on Wednesday, October 26, 2022. Musk posted a video Wednesday showing him strolling into Twitter headquarters ahead of a Friday deadline to close his $44 billion deal to buy the company. AP -
Mr Musk and his children Damian, Kai, Saxon and Griffin met Pope Francis in July at the Vatican. AFP -
Mr Musk speaks by video in June to the Qatar Economic Forum in Doha. Bloomberg -
Mr Musk answers questions at the Qatar Economic Forum. Bloomberg -
Mr Musk arrives at the Met Gala at the Metropolitan Museum of Art in New York City in May. Reuters -
Mr Musk and his mother Maye Musk arrive at the Met Gala in May. AFP -
Mother and son pose and laugh on the Met Gala red carpet. EPA -
Mr Musk waves at the Met Gala. Reuters -
Mr Musk joins in online at the 'Financial Times' Future of the Car Summit in May. Financial Times -
Mr Musk attends the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany, in March. Reuters -
Mr Musk at the Tesla factory in Berlin, Germany, in March. AP -
Mr Musk speaks at SpaceX's Starbase centre in South Texas in February. AFP -
The entrepreneur shakes hands with Brazilian President Jair Bolsonaro in Porto Feliz, Brazil, in May. AP -
Mr Bolsonaro and Mr Musk greet each other in Sao Paulo. Reuters -
Indonesian President Joko Widodo meets Mr Musk at the SpaceX launch site in Boca Chica, Texas, in May. Reuters -
Mr Musk shows Mr Widodo his mobile phone during a tour of the SpaceX launch site in Texas. Reuters
News agencies contributed to this report
