In the annals of “most damaging tweets ever”, Elon Musk’s statement about taking Tesla private has to be right near the top. The fallout from the tweet has seen Musk lose his chairmanship of the Tesla board to a new, stricter chief of board. He also ended up paying $20 million in fines, while a similar amount was paid by the electric carmaker.
Musk was pretty much unapologetic about the whole affair, and indirectly hinted that the tweet was worth the $40 million. However, the whole affair is far from over and it now appears that he could end up facing multiple separate group of securities fraud lawsuits. This stems from the fact that there were multiple different kinds of investors that were directly affected by the fallout from the tweet.
Even as we speak, a federal judge is weighing whether and how, best to divide up the multiple lawsuits into categories. It appears likely that the decision would be taken on basis of whether or not the investors had long positions on Tesla shares.
And this is the root of the issue as well. There are so many different types of investors (including those with long positions, short positions, and those holding options), and that would have a definite bearing on how the presiding judge Edward Chen measures the investors who had the greatest financial stake, and who thus suffered the greatest losses from the tweet.
Speaking on the topic, Reed Kathrein, a lawyer for some of the investors, said:
In this unusual case where shorts and option traders claim the largest losses — yet are susceptible to unique defenses and damage calculations — such separate representation is needed.
Either way, it doesn’t seem like Elon Musk and Tesla have heard the last of it.
To know more about the case, you can look up Isaacs v. Musk, 3:18-cv-04865, U.S. District Court, Northern District of California (San Francisco).
