SAN FRANCISCO January 20 (Reuters) – Elon Musk, CEO of Tesla Inc (TSLA.O), is likely to be called on Friday to testify in a jury trial over his 2018 Twitter post that he had “secured funding” to support the electric car maker private, which shareholders claim has cost them millions in trading losses.
The class action lawsuit resumed in San Francisco federal court with investor Timothy Fries telling the jury how he lost $5,000 buying Tesla stock after Musk sent the tweet at the center of the lawsuit.
Musk, known for his belligerent testimonials, is expected to address why he insisted he supported Saudi investors for the deal, which never materialized, and whether he knowingly made a materially misleading statement with his tweet.
The case is a rare class action lawsuit for securities, and the plaintiffs have already cleared high legal hurdles, with U.S. Judge Edward Chen ruling last year that Musk’s post was untruthful and reckless.
Shareholders claimed that Musk lied when he sent out the tweet, costing investors.
Fries told the jury that the funding obtained meant to him that “there had been some vetting, a critical assessment of those sources of funding.”
Musk’s attorney, Alex Spiro, told the jury in his opening statement Wednesday that Musk believed he had financing from Saudi lenders and was taking steps to complete the deal. Fearing leaks to the media, Musk tried to protect the “common shareholder” by sending the tweet, which contained “technical inaccuracies,” Spiro said.
Harvard Law School professor Guhan Subramanian told the jury that Musk’s behavior in 2018 lacked the hallmarks of traditional corporate deals, tweeting his interest in Tesla without proper financial or legal analysis.
“Compared to the default template, it’s an extreme outlier,” said Subramanian, who called Musk’s approach “unprecedented” and “disjointed.”
A nine-person jury will decide whether the tweet artificially inflated Tesla’s share price by playing up the financing status of the deal, and if so, by how much.
The defendants include current and former Tesla executives, whom Spiro said had “pure” motives in their response to Musk’s plan.
Reporting by Tom Hals in Wilmington, Del., and Jody Godoy in San Francisco; Edited by Noeleen Walder, Peter Henderson, Matthew Lewis and Daniel Wallis
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