Elon Musk gets serious about 420 in securities fraud trial

Elon Musk insists 420 is no joke to him.

During testimony at his ongoing securities fraud trial on Monday, Musk argued that the $420 per share price he offered in his infamous 2018 “secured funding” tweet was not a weed joke, but actually just a coincidence – with a hint of karma.

Musk was asked about the proposed share price by Nicholas Porritt, an attorney for a class of Tesla investors who are suing the billionaire CEO for the loss of millions of dollars they say resulted from his failed attempt to privatize Tesla. And that prompted a bullish eyebrow-raising response from Musk regarding what he considered a serious proposal when almost everyone took it for granted. reference to cannabis.

“You rounded up to 420 because you thought it would be a joke your girlfriend would appreciate, right?” Porritt asked. “No,” Musk said, adding, “there is, I think, karma around 420. I would have to wonder if that’s good or bad karma at this point.”

Porritt, sounding in disbelief, again asked if the $420 was meant to be a joke. “420 wasn’t chosen because of a joke,” Musk said. “He was chosen because there was a 20% premium on the stock price.” He also maintained that it was a “coincidence”.

Musk posted the unfortunate tweet on Aug. 7, 2018, based on what he called a “firm commitment” from Saudi Arabia’s Public Investment Fund (PIF) to take Tesla private. At the time, the company was “under attack” by “Wall Street sharks” and short sellers betting on his business failing, and Musk said he was simply trying to protect its future.

But Porritt stressed there was no document signed with the Saudis, nothing more than a handshake, and that Musk posted the tweet without consulting his own board and without considering how it might affect negatively the shareholders of Tesla.

“Before you tweeted ‘investor support confirmed,’ you didn’t learn if investor support was actually confirmed, did you?”

“Before you tweeted ‘investor support confirmed,’ you didn’t learn if investor support was actually confirmed, did you?” Porritt asked. He later said, “By tweeting ‘investor support confirmed’ you meant ‘Elon Musk support confirmed’.”

The trial hinges on whether the jury thinks Musk should pay potentially billions of dollars in damages to shareholders for money they lost as a result of his tweets. Musk has already agreed to a $40 million settlement with the Securities and Exchange Commission over the tweets, though that settlement doesn’t require him to admit wrongdoing. (Musk has since argued that he was coerced into this settlement.)

Even before Musk spoke, Judge Edward Chen ruled that the jury must treat Musk’s 2018 tweets as false. With this assumption, jurors will have to decide whether Musk misled shareholders with his tweets and caused them to lose money.

Speaking in a soft, hesitant tone and occasionally complaining of “severe” back pain, Musk argued he was not relying exclusively on a commitment to the Saudi PIF when he tweeted “funding secured.” He argued that his shares in SpaceX would also help fund the deal to take Tesla private, noting that he sold nearly $23 billion worth of Tesla stock to fund his acquisition of Twitter – a deal he attempted to in vain to withdraw – as proof of his will. to use his various companies to finance his business.

“Just like I sold Tesla stock to buy Twitter…I didn’t want to sell Tesla stock, but I sold Tesla stock,” he said. “My SpaceX actions alone would have meant funding was secure.”

There were some brief fireworks when Musk accused Porritt of failing to subpoena PIF officials to have the Saudis recorded over conversations with Musk. “The interesting question for you, sir, is why didn’t you subpoena him?” Because if you did, it would destroy your record,” Musk said. Porritt said the plaintiff’s team sent court processors to Saudi Arabia, but Judge Chen quickly broke up the fight.

“My SpaceX actions alone would have meant funding was secure.”

A moment of levity came when Porritt accidentally referred to Musk as “Mr. Tweet,” which Musk acknowledged as “appropriate.”

During his testimony, Musk likened the deal to buying a house with PIF as the mortgage lender. “No documents were signed, but they agreed to buy 5% of Tesla,” Musk said of the PIF.

“So you would expect less documentation for a multi-billion dollar private transaction from a public company than for a home purchase?” Porritt replied, “Is that your testimony? »

Musk was also cross-examined by his own attorney, Alex Spiro, who sought to portray his client as a rambling immigrant who rose on his own to become one of the world’s most successful businessmen. . But much of that narrative may be lost on the jury, as Musk seemed uninterested in answering questions about his childhood.

“Not good,” Musk replied when asked about his upbringing, declining to elaborate.

But when it came to grandiose claims about his own business acumen, Musk was unqualified. “I’ve done a lot of unprecedented things,” he said, responding to a question from Spiro about characterizing his plan to take Tesla private as “unprecedented.”

“I think I’ve raised more money than anyone in history at this point by a significant margin,” Musk boasted while claiming he never lost his investors’ money. Complainants may disagree.

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