Tesla braced for a big hit from legal claims following Musk’s Twitter gaffe
Tesla’s legal team is bracing itself for a number of potential legal claims following an uproar caused by Elon Musk’s disclosures on Twitter that he was considering taking the company private.
Fox News reported that the legal team for the controversial CEO was preparing itself for the costs of private litigation to exceed any fine that the US Securities and Exchange Commission (SEC) could impose on the firm for potentially making misleading statements in an attempt to artificially boost shares.
The SEC issued a subpoena against Tesla on Wednesday as they look to probe its board over the privatisation plans.
On 7 August the controversial Tesla boss took to Twitter to announce that he was considering taking the company private, a move that temporarily sent shares soaring and rattled investors.
He claimed that he had “secured funding” for the move, which would value Tesla at $420 a share.
Tesla later published an email from Musk to colleagues in which he said going private would be the “best path forward” as it would shield it from “wild swings” in its stock price that come with being a public company.
The firm has already been hit with two lawsuits over Musk’s actions. One, launched by stock trader Kalman Isaacs, said Musk’s tweets were false and that his failure to correct them was designed to “completely decimate” short-sellers, whom Musk has criticised in the past.
Tesla was contacted for comment.