Tesla CEO Elon Musk has been sued by a shareholder who allegedly breached his 2018 settlement with the U.S. Securities and Exchange Commission over his use of Twitter. According to a complaint not fired late Thursday in the Delaware Chancery Court, which also cites the board of the electric car company as defendants, Musk’s “erratic” tweets and Tesla’s management’s failure to ensure compliance with the settlement SEC has exposed shareholders to billions of dollars of losses.
The complaint highlighted several Musk posts on Twitter’s social media platform, including its May 1 assessment last year that Tesla’s stock price was “too high,” prompting a plunge of more than $ 13 billion in market value Tesla.
Chase Gharrity, the planner, said Musk’s actions and lack of directors have caused “significant financial damage,” and that they should pay damage to Palo Alto, a California-based Tesla for breach of their fiduciary duties.
The lawsuit was filed even though Tesla’s share price has risen nearly fivefold since Musk’s “too high” tweet, giving Tesla a valuation well above $ 600 billion, and the SEC has not publicly accused Musk of recent breaches.
“It could put pressure on the SEC to go into some sort,” said Charles Elson, a professor at the University of Delaware and a corporate governance expert.
Tesla did not immediately respond Friday to requests for comment. Garrity’s lawyers, Musk’s lawyers in the SEC case, and the SEC did not immediately respond to similar requests.
The SEC settlement followed a Musk tweet in August 2018 that it had “secured funding” to possibly take Tesla privately in a $ 72 billion trade deal. In fact, Musk was not close.
Musk and Tesla each paid $ 20 million in civil fines, and Tesla’s lawyers agreed to review some of Musk’s tweets beforehand.
The arrangement was subsequently amended to clarify when a pre-agreement was required, prompted by an unpublished tweet by Musk about Tesla’s vehicle production forecast.
Last April, a federal judge in San Francisco said Tesla and Musk must face a lawsuit suing Musk tweet shareholders against shareholders. That issue is yet to come.
© Thomson Reuters 2021