Tesla CEO Elon Musk Cleared of Investor Misleading Claims

By Nate Raymond (NS:RYMD)
(Reuters)

A U.S. appeals court upheld a jury's verdict that cleared Tesla CEO Elon Musk and his company of liability over allegations of misleading investors. This followed Musk's 2018 tweet stating he had "funding secured" to take the company private.

The 9th U.S. Circuit Court of Appeals rejected claims from Tesla investors who argued the jury instructions were flawed and overly burdensome regarding proving Musk's intent.

The investors contended that U.S. District Judge Edward Chen's instructions were confusing since he previously deemed Musk's tweets inaccurate and reckless, suggesting that proving Musk's knowledge should not be necessary.

However, the court maintained that knowing intent was relevant for determining damages among Tesla’s directors and Musk himself.

Ellyde Thompson, representing Musk and Tesla, welcomed the appellate decision, while the plaintiffs' lawyers did not respond.

The initial case stemmed from tweets made in 2018, leading to a $40 million settlement between Musk, Tesla, and the U.S. Securities and Exchange Commission. Musk's tweet on August 7 announced plans to take Tesla private at $420 per share, followed by assertions of confirmed investor support. The initial stock price spike was followed by a drastic fall after it became clear a buyout would not occur, leading to claims of misleading investors and significant financial losses.