January 31, 2023

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Elon Musk told a San Francisco federal court on Monday that he could sell SpaceX shares to get Tesla Private in 2018. He was then, and still is, the CEO and largest shareholder of both companies.

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Musk is being sued by Tesla shareholders for a series of tweets he wrote in August 2018, saying that the “funding was secure” to take the automaker private for $420 per share, and thus “Investor support” was confirmed for the deal. Trading in Tesla was halted following his tweet and its share price was volatile for weeks.

Shareholders in the certified class action lawsuit allege that Musk’s tweets were reckless and false, and that relying on his statements to make investment decisions cost them a lot of money.

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Musk later claimed that he had a verbal commitment from Saudi Arabia’s Sovereign Wealth Fund, and was sure that funding would come at his proposed price based on a handshake. However, the deal never materialised.

During his second day on the witness stand, Musk claimed that another reason he said “funding was secure” for a deal in 2018 was because he wanted to sell shares of SpaceX, a US defense contractor and satellite internet company. which he runs, to finance the transaction.

“SpaceX stock alone means ‘funding secured,’” Musk said under oath. Not that I want to sell SpaceX stock, but I could, and if you look at the Twitter transactions — that’s what I did. I sold Tesla stock. To complete the Twitter transaction. And I would have done the same here.”

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Musk did not say how many shares in his reusable rocket maker he would be able to sell, to whom and at what price to finance the Tesla buyout.

In April 2018, SpaceX said in a Securities and Exchange Commission filings that it had raised approximately $214 million as part of a financing round in which it was seeking over $500 million in total equity funding.

An attorney for the shareholders, Nicholas L. Levy of Levy & Korsinski. Porrit asked Musk if the price he suggested for Tesla shares was a joke because 420 is a reference to cannabis in pop culture.

Musk insisted it was a coincidence. He added, “There is something, I think, around Karma 420 … I must question whether it is good or bad Karma at this point.”

This is not the first legal action Musk has faced over his tweets. The SEC charged Musk and Tesla with civil securities fraud shortly after their postings, and they separately paid a $20 million fine to the federal agency to settle the charges. He later signed an amended consent decree that required Musk to temporarily relinquish his role as chairman of the board at Tesla, and a securities attorney to tweet tweets that contained material business information about Tesla. The information was included before he posted them.

Musk recently became CEO of social media business Twitter after leading a $44 billion leveraged buyout of the company in October 2022. Saudi Prince Alwaleed bin Talal bin Abdulaziz is the second largest shareholder of the social media company after Musk. Last November, Sen. Chris Murphy, D.-Conn., sent a letter To request a review of the financing for the Musk-Twitter deal to the Committee on Foreign Investment in the United States.

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