You’re here (TSLA) Board members testified Wednesday that Elon Musk’s 2018 Twitter posts about privatizing the electric vehicle company were consistent with what he told the board about a possible privatization agreement.
External Director James Murdochson of film and television titan Rupert Murdoch, spoke among other former and current board members.
The testimony is part of the class action lawsuit filed by company shareholders who claim they traded Tesla stock to their detriment based on the tweets. They claim that Musk and the administrators are liable to pay billions of dollars in damages.
On August 7, 2018, Musk job to the social media site he had “funded” to take Tesla private. Although the deal never materialized, Musk maintains that at the time he believed – based on a series of meetings with Saudi Arabia’s Public Investment Fund (PIF) – that his authorized representative was was “unequivocally” verbally committed to the transaction.
Murdoch, named as a defendant in the case, told the jury that on August 2, 2018 – five days before Musk’s disputed first tweet – Musk emailed the board communicating a takeover bid. of Tesla at $420 per share.
Murdoch called Musk’s email “meaningful” and explained that the board immediately called a special meeting – in the absence of Musk as a potential bidder – to discuss the deal.
Tesla then-CEO Deepak Ahujasaid Murdoch, communicated to the board that Musk’s vision for the transaction would primarily include funding from Saudi Arabia’s Sovereign Wealth Fund and potentially include investments from existing Tesla shareholders who may choose to turn their public investments into private actions.
“I found it new…and maybe difficult,” Murdoch said, adding that he later hosted Musk for a meeting at his house where the two were “talking about this dynamic.”
The next day, August 3, 2018, Murdoch said the board met again, this time with Musk included. He testified that Musk and Ahuja said funding was plentiful and a clear level of intent was expressed by the FIP.
“Did it surprise you that Musk expressed confidence in funding through the Saudi PIF? Musk’s lawyer asked Murdoch, based on his own financial dealings with Middle Eastern investment funds.
“No,” Murdoch replied.
Former Tesla CEO Linda Johnson Ricealso named as a defendant in the lawsuit, told jurors she also recalled Ahuja’s presentation to the board regarding the PIF’s interest in taking Tesla private.
“I understand that Musk discussed this transaction with the PIF,” Johnson Rice said of the Aug. 2 meeting, “and they were interested and very sincere in wanting to fund the transaction.”
Current CEO of Tesla Veronique Ira testified that during the August 2 and 3 meetings, Ahuja and Musk respectively told the board that the PIF alone could fund the entire transaction and that Musk’s tweets were consistent with his email to the board. Regardless of Saudi funding, however, Ehernpries added that Musk had “more than enough interest” from investors and that the PIF was unlikely to be Musk’s only avenue to take Tesla private.
Ehernpreis admitted during cross-examination that he was not aware of any commitment for any particular financing, or price of financing that would be required to take Tesla private at the time of Musk’s postings.
Musk’s brother, an outside Tesla executive also named in the lawsuit, said he deliberately did not attend the initial board meeting because of his family relationship creating a conflict of interest. In cross-examination, he admitted to asking his brother to be more thoughtful in his use of Twitter.
Other Tesla directors named in the lawsuit include former board members Brad Buss and Antonio Gracias, and current member Robyn Denholm.
Shareholders are charged with proving that at the time of the tweets, Musk knew the information they contained was false and material — information that a reasonable investor would rely on to make investment decisions. They must also prove that the information caused them to buy or sell Tesla stock to their detriment.
Pre-trial, Senior District Court Judge Edward Chenwho presides over the case, ruled that Musk’s funding statement was false.
The defense closed its thesis on Wednesday. Closing arguments are scheduled for Friday, after which the nine-member jury in the case is expected to begin deliberations.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
Follow Yahoo Finance on Twitter, Facebook, instagram, Flipboard, LinkedInand Youtube
Find live stock quotes and the latest economic and financial news