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Musk resumes testimony in fraud trial over 2018 Tesla tweet

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2023-01-23T16:58:29Z

Elon Musk attends the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany, March 22, 2022. Patrick Pleul/Pool via REUTERS

Tesla Inc (TSLA.O) Chief Executive Elon Musk returned to the witness stand on Monday to defend himself against claims he lied to investors by fraudulently tweeting in 2018 that he had funding to take the electric carmaker private.

The trial in San Francisco federal court tests Musk’s penchant for taking to Twitter to air his sometimes irreverent views, and when he can be held liable for crossing a line.

At stake are millions of dollars for shareholders who claim they suffered losses after Musk tweeted that he had “funding secured” to take Tesla private at $420 per share, and that “investor support is confirmed.”

Also at stake is the reputation of Musk, whose personal stature is a central asset of the Tesla brand.

The plaintiffs have already cleared high legal hurdles in the rare securities class action, with U.S. Judge Edward Chen ruling last year that Musk’s post was untruthful and reckless.

Musk on Friday called Twitter, which he bought in October, the most democratic way to communicate but said his tweets did not always affect Tesla stock the way he expects.

“Just because I tweet something does not mean people believe it or will act accordingly,” Musk told the jury on Friday.

Musk is expected on Monday to address why he insisted incorrectly that he had the backing of Saudi investors to take Tesla private, and whether he knowingly made a materially misleading statement with his tweet.

Some outside trial lawyers have said Musk appeared thin-skinned and can be needled.

But Musk on Friday spoke softly and in a sometimes bemused manner, contrasting with his occasional combative testimony in past trials.

Musk described the difficulties Tesla went through around when he sent the “funding secured” tweet, including bets by short-sellers that the stock would fall.

“A bunch of sharks on Wall Street wanted Tesla to die, very badly,” he said.

Musk was also asked about Tesla investor Ron Baron’s urging him to stop using Twitter, which Musk said he did not recall.

Alex Spiro, Musk’s lawyer, said in his opening statement last week that Musk believed he had financing from Saudi backers and was taking steps to make the buyout happen.

Fearing leaks to the media, Musk tried to protect the “everyday shareholder” by sending the tweet, which contained “technical inaccuracies,” Spiro said.

A jury of nine will decide whether Musk artificially inflated Tesla’s share price by touting the buyout’s prospects, and if so by how much.

The defendants include current and former Tesla directors, whom Spiro said had “pure” motives in their response to Musk’s plan.

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