Elon Musk tweets and ‘ordinary people’ see their fortunes evaporate.
That was the argument presented before a jury by attorneys representing a class of Tesla investors in opening arguments in Musk’s securities fraud trial, which began today in a San Francisco courtroom. The plaintiffs argue that Musk’s 2018 tweets about taking Tesla private, saying he had “secured funding,” caused them to lose millions of dollars.
“His lies caused ordinary 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. For markets to work normally and fairly, it is “crucial that he — and the company — be held accountable,” Porritt said.
He further argued that there was no plan to take Tesla private, as confirmed by a later investigation by the Securities and Exchange Commission, and that the first tweet was sent to Tesla’s board on August 7, 2018 without prior notice.
Musk’s side was having none of it. Attorney Alex Spiro argued that the billionaire actually wanted to take Tesla private and that financing “wouldn’t become a problem” until potential investors in Saudi Arabia pulled out, but that Musk had simply chosen his words poorly when drafting his tweet .
“These tweets are casual, sporadic thoughts.”
“These tweets are casual, sporadic thoughts,” Spiro said. “And I want to say it again – there are technical inaccuracies: ‘secured’, ‘confirmed’, ‘only’.”
At several points in his opening argument, Spiro argued that the phrase “funding secured” was “the wrong choice of words,” a “throwaway rule,” and ultimately “didn’t matter” in the markets’ broader responses. Spiro even tried to question the meaning of the words themselves.
“It’s not clear what securing funding even means in a tweet sentence,” he said. “It’s not obvious how you just think about something, and yet all the details are recorded.”
Spiro added, “No, Twitter haikus – they don’t move the market. CEOs who can achieve what they want, fulfill their considerations – that’s what moves the market.”
The rest of the day was devoted to hearing testimonials from Littleton, a 71-year-old Kansas City investor who sold all of his Tesla stock after hearing Musk’s tweet.
“That’s the tweet that started it all”
“That’s the tweet that started it all,” said lead prosecutor Glen Littleton when he was shown the “funding secured” tweet. “I was quite shocked, because it put almost all my positions in jeopardy.” Littleton confirmed that he considered “funding secured” the most important part of the tweet “because that made taking private more final, completely final 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 hopes of regaining financial health. Indeed, Tesla and Musk risk losing billions of dollars if the jury rules against him in the case.
“I hope we make up for the losses incurred by the tweet,” Littleton said.