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Elon Musk heading for trial showdown with Tesla investors over ‘buyout’ tweet

Elon Musk's life will soon be a major motion picture.

Elon Musk's life will soon be a major motion picture. Photo: Getty

Elon Musk, Tesla Inc’s chief executive, has testified that investors do not always react to his Twitter messages as he expects, defending himself in a fraud trial over his 2018 tweet that he had funding to take the electric car maker private.

Musk’s testimony began on Friday with questions about his use of Twitter, the social media platform he bought in October. He called it the most democratic way to communicate but said his tweets did not always affect Tesla stock the way he expected.

“Just because I tweet something does not mean people believe it or will act accordingly,” Musk told the jury in San Francisco federal court.

Musk testified for less than 30 minutes before court adjourned until Monday and before he could be quizzed about a 2018 tweet that he was considering taking Tesla private and that he had “funding secured.”

He is expected to address why he has insisted he had Saudi investor backing to take Tesla private, which never occurred, and whether he knowingly made a materially misleading statement with his tweet.

The case is a rare securities class action trial and the plaintiffs have already cleared high legal hurdles, with US Judge Edward Chen ruling last year that Musk’s funding post was untruthful and reckless.

‘Untruthful and reckless’

The case is a rare securities class action trial and the plaintiffs have already cleared high legal hurdles, with US Judge Edward Chen ruling last year that Musk’s post was untruthful and reckless.

Shareholders alleged that Musk lied when he sent the tweet, costing investors.

Fries told the jury that funding secured meant to him that “there had been some vetting, some critical review of those funding sources.”

Musk’s lawyer, Alex Spiro, told the jury in his opening statement on Wednesday that Musk believed he had financing from Saudi backers and was taking steps to make the deal happen.

Fearing leaks to the media, Musk tried to protect the “everyday shareholder” by sending the tweet, which contained “technical inaccuracies,” Spiro said.

‘Unprecedented, incoherent’

Guhan Subramanian, a Harvard Law School professor, told the jury that Musk’s behaviour in 2018 was “unprecedented” and “incoherent” in structuring a corporate deal because he went public with his intent to buy Tesla without proper financial or legal analysis.

A jury of nine will decide whether the tweet artificially inflated Tesla’s share price by playing up the status of funding for the deal, and if so, by how much.

The defendants include current and former Tesla directors, whom Spiro said had “pure” motives in their response to Musk’s plan.

-AAP

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