Musk and Tesla’s battle with the SEC continues

Earlier this month, Tesla Inc. CEO Elon Musk once again publicly aired his grievances with the Securities and Exchange Commission during a TED talk conference. Musk referred to the SEC as “those bastards” who allegedly forced him to “lie” and resolve the regulator’s fraud charges over his now-infamous 2018 tweets to save the company from bankruptcy. 

Musk continues to argue that the SEC’s claim, that at the time of his tweets he had not secured funding to take Tesla private, is untrue.  

"Why do I not have respect for the SEC in that situation? And I don't mean to blame everyone at the SEC, but certainly the San Francisco office. It's because the SEC knew that funding was secured, but they pursued an active public investigation nonetheless," Musk said during a video interview with Chris Anderson, the head of TED.

In another case across the country involving the same tweets, on April 1, 2022, under sealed order, a judge in the Northern District of California granted Plaintiff’s Motion for Partial Summary Judgment, finding that three of Musk’s tweets on August 7, 2018 were “false and misleading” and that Musk had knowledge of their falsity at the time they were published. The order denied summary judgment on the issue of reliance.

On April 22, 2022, Musk and Tesla filed a Motion for Leave to Seek Reconsideration of that Court’s Partial Grant of Summary Judgment. The motion argues that this finding on summary judgment outside of a trial is an “extraordinarily grave and rare step” because there remains issues of fact regarding falsity and scienter. The motion also argues that the evidence failed to show as a matter of law that the tweets were material to investors. 

A decision on this Motion for Leave is pending. The case is In Re: Tesla Inc. Securities Litigation, case number 3:18-cv-04865, in the U.S. District Court for the Northern District of California.

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Faruqi & Faruqi, LLP focuses on complex civil litigation, including securities, antitrust, wage and hour, personal injury and consumer class actions as well as shareholder derivative and merger and transactional litigation. The firm is headquartered in New York, and maintains offices in California, Georgia and Pennsylvania.

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About Cristina M. Paneque

Cristina Paneque's practice is focused on securities litigation. She is an associate in the firm's New York office.

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