Elon Musk spent an entire day on the witness stand discussing the infamous ‘secured funding’ tweets in which he claimed to have financial backing for a deal to take Tesla private.
Judge Edward Chen had previously ruled that Musk’s August 2018 statements about “secured funding” to take Tesla private were false “and that Mr. Musk made these statements recklessly”. Chen told the jury that they had to assume the tweets were fake, but they also had to decide whether Musk knew the tweets were fake and whether the tweets gave reasonable investors a different impression of the reality of Tesla’s situation.
Today, Musk said the ‘Funding guaranteed’ tweet was ‘absolutely true’ and that he received a verbal funding commitment during a meeting with Yasir Al-Rumayyan, managing director of the Saudi government’s Public Investment Fund (PIF). “I felt like we had a deal, and it was done,” Musk said.
When the plaintiff’s attorney, Nicholas Porritt, asked Musk about Al-Rumayyan’s messages that the PIF needed more details before moving forward, Musk said the Saudi official was “backing off” and “hiding, for lack of a better word”.
“We did our best to subpoena Yasir and get him to participate in this trial,” Musk said. “The interesting question for you is why didn’t you subpoena him? Well, because if he did, it would destroy his business. That’s why.”
Porritt responded that the plaintiffs’ side had contacted Saudi Arabia in an attempt to obtain Al-Rumayyan’s testimony. Before he could elaborate, Judge Chen interrupted the discussion and withdrew both Musk’s and Porritt’s responses from the case file, saying it had nothing to do with the case.
Chen ruled that Musk’s ‘secured funding’ tweet was false because “discussions between Tesla and PIF were clearly at a preliminary stage”, with no discussion of the purchase price or what percentage of Tesla the Saudi fund would buy. “Based on the evidence in the record, the Court finds that no reasonable jury could find the ‘Funding Obtained’ statement to be accurate and not misleading,” Chen’s decision in April 2022 said.
Musk says he could have sold SpaceX shares
Musk also argued today that he had “secure funding” due to his stake in SpaceX, which he could have sold to strike a privatization deal with Tesla.
“A very important point for the jury that I want to emphasize is that I had [sic] majority shareholder in SpaceX, which is the most valuable private company in the United States, and therefore the “guaranteed” referred to both the PIF and the fact that I had SpaceX stock to back the transaction. This is an extremely important point and you seem to deliberately avoid it,” Musk said.
Musk’s testimony began on Friday in the US District Court for the Northern District of California. The case mainly concerns two tweets that Musk posted on August 7, 2018. first said: “I’m considering privatizing Tesla for $420. Financing secured.” The second tweet said: “Investor support confirmed. The only reason it’s not certain is that it depends on the shareholder vote.
The plaintiffs argue that Musk’s misrepresentation of the funding guarantee led them to buy Tesla stock at inflated prices and ultimately lose money when the market reacted to the news that Musk had no funding deal.
“I said I was considering, not that it was going to happen, but I was considering taking Tesla private at $420 and I think the funding is secure to take it private at that price,” Musk said today.
Musk acknowledged during his testimony that the Saudi PIF had not seen the proposed price of $420 per share prior to his tweet. “They were aware of the proposed price on that date, yes,” Musk said.