Musk Testifies in Fraud Trial, Says Not Everyone Believes What He Says

Musk Testifies in Fraud Trial, Says Not Everyone Believes What He Says

Elon Musk wearing a suit leaving a courthouse during a trial in 2021.
Enlarge / Tesla CEO Elon Musk walks out of court during the SolarCity trial in Wilmington, Delaware on July 12, 2021.

Getty Images | Bloomberg

Elon Musk began testifying today in the jury trial over whether his 2018 bogus tweets about taking Tesla private caused investors to lose billions of dollars.

During his testimony in federal court in San Francisco, Musk denied that his tweets cause Tesla’s stock price to go up or down. “Just because I tweet something doesn’t mean people believe it or act on it,” Musk said in response to a question from attorney Nicholas Porritt, who is representing investors in the class action lawsuit against Musk.

“It is difficult to say that the price of the shares is related to the tweets. There have been many cases where I thought if I tweeted something, the stock price would go down,” the Tesla CEO said on the witness stand.

Musk mentioned a tweet in May 2020 in which wrote, “Tesla’s stock price is too high in my opinion.” Musk said today that Tesla’s stock price “inconsistently” rose after the tweet.

“Even though I tweeted that the stock price was too high in my opinion, the stock price then went up,” Musk said today. “You’d think if I tweeted that the stock price was too high it would go down, but it actually went up.”

In fact, Tesla’s stock price fell 10 percent the day Musk made that tweet, though the price rose again the following week.

“What I’m trying to say is that the causal relationship clearly doesn’t exist just because of a tweet,” Musk said in court today.

The “Secured Financing” tweet was false, the judge ruled

The current case is primarily about two tweets that Musk made on August 7, 2018. The first He said, “I’m considering taking Tesla private at $420. Financing secured.” He second The tweet read: “Investor support confirmed. The only reason this is not certain is that it depends on a shareholder vote.”

Musk only testified for less than half an hour today, but will take the stand again on Monday. For this reason, Porritt has not yet questioned Musk about the specific tweets that this case is about.

Judge Edward Chen has already ruled that the two tweets about taking Tesla private were false and made recklessly. Before testimony began today, Chen reminded the jury to assume the tweets were false.

However, the jury is still out on whether Musk knew they were untrue and whether the tweets gave reasonable investors an impression of Tesla’s situation that was different from reality, Chen said. The case is taking place in the US District Court for the Northern District of California.

Before Musk began testifying today, jurors heard from two other witnesses called by the plaintiffs: an investor who bought Tesla stock after Musk’s tweets and an expert witness who testified about purchases by management. Musk’s testimony began near the end of the trial day.

During opening remarks on Wednesday, Musk’s lawyer, Alex Spiro, argued that Musk’s false tweets were just “technical writing inaccuracies” and not material to investors. Porritt said investors bought Tesla shares based on Musk’s claim that he had raised funds to take the company private at $420 a share.

“There was no dispute that Elon Musk lied, and there was no dispute that Tesla’s investors were hurt by these lies,” Porritt said.

Musk: “You are trying to combine deceptive with short”

Today, Porritt asked Musk if he is aware that his tweets about Tesla are governed by federal securities laws that require them to be accurate, as are press releases and Securities and Exchange Commission filings.

“Yes, but obviously, there is a limit if you have 240 characters to what you can say. Obviously, you can be much more detailed in a presentation, and everyone on Twitter understands that,” Musk responded. (Twitter’s character limit is 280 characters, but Musk repeatedly said it was 240 characters during his testimony.)

Porritt responded: “There’s no exception to the SEC’s rules based on character limitations on Twitter, right?”

“There isn’t, but I think you can’t ignore the character limitation and everyone on Twitter is aware of the character limitation,” Musk said. “I think you can be absolutely honest. But can you be complete? Of course not,” Musk said in response to another question.

Musk accused Porritt of asking tricky questions. “The tweets are true. They are just short. I think you are trying to combine trickery with brief. That’s misleading,” Musk said.

“The tweets are information that I think the public should hear,” Musk also said.

In response to other questions, Musk also spoke about short sellers in the context of why he wanted to take Tesla private in 2018. “I think short selling should be illegal. It’s a means for bad people on Wall Street to steal money.” from small investors,” Musk said.

Short sellers “want Tesla to die” and “plant false stories in the media to drive the stock down and do everything in their power to make the company dead. It’s evil,” Musk said.

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