Elon Musk tweets, and “regular people” watch their fortunes evaporate.
That was the argument put before a jury by lawyers representing a class of Tesla investors in opening arguments in Musk’s securities fraud trial, which kicked off today in a courtroom in San Francisco. The plaintiffs are arguing that Musk’s 2018 tweets about taking Tesla private, in which he said he had “funding secured,” led them to lose millions of dollars.
“His lies caused regular people, like Glen Littleton, to lose millions and millions of dollars,” attorney Nicholas Porritt said Wednesday, referring to the lead plaintiff in the class-action case. In order for markets to operate normally and fairly, it’s “critical that he is held — and the company is held — liable,” Porritt said.
He went on to argue that there was no plan in place to take Tesla private, as confirmed by a subsequent investigation by the Securities and Exchange Commission, and that the initial tweet on August 7th, 2018, was sent without advance notice to Tesla’s board.
Musk’s side was having none of it. Attorney Alex Spiro argued that the billionaire actually did want to take Tesla private and that funding “wasn’t going to be an issue” until potential investors in Saudi Arabia had backed out, but that Musk had simply chosen his words poorly when crafting his tweet.
“These tweets, they’re informal, sporadic thoughts.”
“These tweets, they’re informal, sporadic thoughts,” Spiro said. “And I want to say it again — there’s technical inaccuracies: ‘secured,’ ‘confirmed,’ ‘only.’”
At various points in his opening argument, Spiro argued that the phrase “funding secured” was “the wrong word choice,” a “throwaway line,” and ultimately “didn’t matter” in the broader reactions by the markets. Spiro even tried to cast doubt on the meaning of the words themselves.
“It isn’t clear what funding secured even means in a tweet phrase,” he said. “It’s not self-evident how one could be just considering something, and yet, all the details are set.”
Spiro added, “No, Twitter haikus — they don’t move the market. CEOs who can accomplish what they set their mind to, meeting their considerations — that’s what moves the market.”
The rest of the day was devoted to hearing testimony from Littleton, a 71-year investor from Kansas City who sold all of his Tesla shares after hearing about Musk’s tweet.
“That’s the tweet that started everything”
“That’s the tweet that started everything,” lead plaintiff Glen Littleton testified when shown the “funding secured” tweet. “I was pretty shocked because that put at risk almost all my positions.” Littleton confirmed that he viewed “funding secured” as the most important part of the tweet “because that made the taking private more definite, completely definite in my mind,” he said.
Littleton, who owns several Teslas and says he still believes in the company and its mission, said he filed the lawsuit in the hopes of being made financially whole again. Indeed, Tesla and Musk stand to lose billions of dollars if the jury rules against him in the case.
“I’m hoping we recover the losses that were incurred because of the tweet,” Littleton said.