Elon Musk spent a full day on the witness stand today to discuss the infamous “funding secured” tweets in which he claimed to have financial backing for a deal to take Tesla private.
Judge Edward Chen already ruled that Musk’s statements in August 2018 about having “funding secured” to take Tesla private were false “and that Mr. Musk recklessly made those representations.” Chen told the jury they must assume the tweets were false but that they must also decide whether Musk knew the tweets were untrue and whether the tweets gave reasonable investors an impression of Tesla’s situation that was different from reality.
Today, Musk said the “funding secured” tweet was “absolutely truthful” and that he had received a verbal funding commitment at a meeting with Yasir Al-Rumayyan, managing director of the Saudi Arabia government’s Public Investment Fund (PIF). “I felt we had a deal, and it was a done deal,” Musk said.
When plaintiff’s attorney, Nicholas Porritt, asked Musk about messages from Al-Rumayyan stating that the PIF needed more details before moving ahead, Musk said the Saudi official was “backpedaling” and “ass-covering, for lack of a better word.”
“We’ve tried our absolute hardest to subpoena Yasir and to have him be part of this lawsuit,” Musk said. “The interesting question for you, sir, is why did you not subpoena him? Well, because if you did, it would destroy your case. That’s why.”
Porritt responded that the plaintiffs’ side contacted Saudi Arabia in an attempt to get Al-Rumayyan’s testimony. Before he could elaborate, Judge Chen cut off the discussion and struck both Musk’s answer and Porritt’s reply from the record, saying it was irrelevant to the case.
Chen ruled that Musk’s “funding secured” tweet was false because “discussions between Tesla and the PIF were clearly at the preliminary stage,” with no discussion of purchase price or what percentage of Tesla the Saudi fund would buy. “Based on the evidence of record, the Court finds that no reasonable jury could find the statement ‘Funding secured’ accurate and not misleading,” Chen’s ruling in April 2022 said.
Musk says he could have sold SpaceX shares
Musk also argued today that he had “funding secured” because of his ownership stake in SpaceX, which he could have sold to complete a taking-Tesla-private deal.
“A very important point for the jury I want to emphasize is that I had [sic] majority shareholder of SpaceX, which is the most valuable private company in the United States, and so the ‘secured’ referred both to PIF but also that I had SpaceX stock to also secure the transaction. This is an extremely important point, and you seem to be deliberately avoiding it,” Musk said.
Musk’s testimony began Friday in US District Court for the Northern District of California. The case is primarily about two tweets Musk made on August 7, 2018. The first said, “Am considering taking Tesla private at $420. Funding secured.” The second tweet said, “Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote.”
Plaintiffs argue that Musk’s false statement about securing funding caused them to buy Tesla stock at inflated prices and ultimately lose money when the market reacted to news that Musk didn’t have a funding deal.
“I said that I’m considering, not that it will happen, but that I’m thinking about taking Tesla private at $420 and that, in my opinion, funding is secure for taking it private at that price,” Musk said today.
Musk acknowledged during testimony that the Saudi PIF didn’t learn of the proposed $420 per-share price until his tweet. “They learned the price proposal on that date, yes,” Musk said.
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