As Musk seeks to acquire Twitter, his battle to tweet freely strikes Snag
(Bloomberg) — Elon Musk, CEO of Tesla Inc. , earned the nickname “Teflon Elon” by successfully facing multiple legal challenges. But a recent court ruling suggests his personal streak of victories may be in jeopardy.
Last week, it was revealed that a San Francisco judge ruled that one of Musk’s 2018 tweets about making his company private was a lie.
It’s one of at least a dozen high-profile cases involving Tesla or Musk in years after he posted an infamous “secured financing” tweet, sending stocks soaring and provoking the wrath of the US Securities and Exchange Commission.
Now, as Musk ramps up his battle to buy Twitter Inc. The ongoing repercussions of his past use of the social media platform may come back to haunt him.
The judge’s decision tilts Libra heavily in favor of Tesla investors who are suing Musk and Tesla for up to $12 billion in business losses that they blame on the private tweets. This case is set for jury trial in January.
The decision also poses a threat to Musk’s efforts to unleash himself from the oversight of the Securities and Exchange Commission — an effort so personal for the world’s richest person that he became visibly emotional while criticizing the agency during a TED talk in Canada last week.
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Securities law experts, including Columbia Law School professor Jeffrey Gordon, say judging a lie after years of insisting his tweets were truthful will make it difficult for the corrupt billionaire to wriggle from the bottom of the “Twitter Sitter” — the moniker of an arrangement with the SEC that a Tesla official has He pre-approves what Musk says on social media about some topics related to the company, such as production.
Musk said in a statement to New York federal court last month that he “never lied to shareholders.”
That was before U.S. District Court Judge Edward Chin in San Francisco issued his ruling, which remains closed from public view.
Musk is trying to appeal the finding, saying in Friday’s filing that the judge “analyzed the individual phrases of the various tweets and noted some other information that should have accompanied the tweets, despite the short-form Twitter medium limiting the number of characters per tweet.”
Alex Spiro, Musk’s attorney, did not respond to a request for comment on the SEC’s battle, which is still ongoing in New York. But his response to Chen’s ruling on April 16 was defiant.
“Nothing will ever change the fact, which is that Elon Musk was considering taking Tesla private and it could be,” the attorney said.
Gordon said the Tesla CEO is not helping himself by continuing to defend the tweet.
“Musk’s subsequent denial in the face of Judge Chen’s ruling will further weaken his case against the SEC,” he said.
Not all stock experts agreed that Chen’s decision could be so harmful. James de Cox, a professor at Duke School of Law, said the SEC is facing an uphill battle trying to apply a ruling from a San Francisco lawsuit to a New York case involving different parties.
Going forward, the challenge for the SEC is how to organize high profile public figures like Musk with their millions of Twitter followers, with these VIPs knowing the potential impact of their data on capital markets, said Jill E. Fish, a professor at the university. from Pennsylvania Law School.
“Musk is the current and most obvious example of that,” Fish said. “He’s probably not the only one.”
The Securities and Exchange Commission declined to comment.
Read more: Tesla’s many litigation records keep lawyers and judges busy
As for Musk’s other legal issues, he is awaiting a ruling any day after a $13 billion trial in Delaware over his role in the 2016 purchase of SolarCity from the electric car maker.
In the San Francisco case, Bloomberg Intelligence estimated before Chen ruled that the lawsuit could be settled by between $260 million and $380 million.
The settlement price has skyrocketed,” said Adam C. Pritchard, a professor at the University of Michigan Law School. He said Chen’s ruling was a “huge win” for shareholders, and it could be difficult to obtain an appeal against Musk’s decision.
Nicholas Poret, a lawyer representing the shareholders, said he expects Chen’s ruling to be announced in the next few days.
Burrett said Chen’s decision means that Musk will not be able to argue to jurors that some key statements in his tweets were correct, or that he did not act fraudulently when he made them.
Burritt said a pre-trial ruling discrediting a defendant in a securities fraud case is “very rare.” “It certainly was by no means obtained in a size comparable to this one.”
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