Judge: Elon Musk's Infamous Tweets About Using Tesla Private Were False

Lucas NolanApril 18, 2022

Recent court filings show that late on Friday, a judge ruled that Tesla CEO Elon Musk knowingly lied when he tweeted about a deal to take Tesla private in 2018. The infamous “funding secured” tweet landed Musk in hot water with securities regulators and his own shareholders.

CNBC reports that a court filing made last Friday in relation to the ongoing case between shareholders suing Tesla and CEO Elon Musk over alleged securities fraud showed that a ruling had been made in relation to Musk’s statements about taking the company private.

Tesla CEO Elon Musk unveils the new Tesla factory in Fremont, Calif., Wednesday, Oct. 27, 2010. The new Tesla factory is the former NUMMI plant. (AP Photo/Paul Sakuma)

Shareholders are suing Tesla over money they lost following Musk’s tweets in 2018 in which he stated that he had secured funding to take Tesla private at $420 a share. A judge has now ruled that Musk knowingly made false statements in posting these tweets.

Following Musk’s tweets, Tesla’s stock trading halted then shares became extremely volatile for a considerable amount of time. Musk later claimed to have been in discussions with Saudi Arabia’s sovereign wealth fund and was confident that he could secure funding at $420 a share, but a deal was never finalized.

The SEC sued Musk at the time, claiming that he had committed securities fraud. Musk finally agreed to an SEC settlement after initially refusing and both he and Tesla paid a $20 million fine; but in February of this year, it was reported that Musk was issued another subpoena by the SEC which was attempting to determine whether he had complied with the settlement agreement.

Judge Edward M. Chen, who is presiding over a shareholders’ lawsuit against Musk, concluded that Musk acted with scienter — that he knowingly made false statements about having funding secured to take Tesla private at the time of his tweets.

Musk lashed out at the SEC on Thursday during a TED conference, calling the SEC’s San Francisco “bastards.” Musk commented: “The SEC knew that funding was secured but they pursued an active, public investigation nonetheless at the time. Tesla was in a precarious financial situation. And I was told by the banks that if I did not agree to settle with the SEC that they would, the banks would cease providing working capital and Tesla would go bankrupt immediately. So that’s like having a gun to your child’s head. I was forced to concede to the SEC unlawfully.”