Posted on January 17, 2023, 10:26 pmUpdated January 17, 2023 at 10:28pm
Elon Musk’s troubles continue. After his legal disputes with Twitter, a new trial began in San Francisco on Tuesday, against Tesla’s boss accused by investors of having manipulated the share price of his car company, through a series of tweets on the social network.
The case dates back to August 2018, when Elon Musk announced on Twitter his intention to take Tesla out of the stock market. Messages that had strongly fluctuated the action for a few days. “The plaintiffs allege that these tweets were in fact false and artificially affected the stock price of Tesla and other securities,” Judge Edward Chen summarized for prospective jurors.
A first disappointment
The case appears to be getting worse for Elon Musk as his lawyers have already suffered a minor setback even before the trial has even begun. Unable to avoid the trial, the lawyers of the billionaire have in fact tried, in vain, to obtain the transfer of him to a jurisdiction other than that of San Francisco, considered hostile to the interests of their client. But this Friday, the magistrate refused to transfer the charge to Texas, where Elon Musk moved Tesla’s headquarters.
The defense argued that the multibillionaire could not have benefited from a fair trial in San Francisco, where he bought Twitter in late October, and has been widely criticized for his decisions, from the platform’s content moderation policy to mass layoffs.
A hostile climate
“Over the past few months, local media have saturated this district with biased and negative stories about Mr. Musk,” the lawyers argued in a motion. “The local press, contrary to its usual coverage (layoff plans), personally blamed Mr. Musk for the job cuts and even accused him of breaking the law. Local elected officials, including the mayor of San Francisco, have participated in the protests against him,” they said.
Wasted effort. Edward Chen, on the contrary, estimated on Friday that an impartial jury could be set up in the Californian city. In a previous decision related to this case, the judge had already held that the famous 2018 tweet could be considered “false and misleading”.
The trial will last three weeks and Elon Musk is on the witness list. The brief messages from the Tesla boss have already earned him numerous disputes with the authorities. The US stock market policeman, the SEC, also filed a complaint at the time, believing that Elon Musk had not provided evidence of financing him. The regulator then forced him to relinquish the chairmanship of the Tesla board, pay a $20 million fine, and later demanded that his tweets directly related to Tesla’s business be pre-approved by a competent attorney.
This new legal episode falls even more badly for Elon Musk as the price of Tesla has already suffered a real stock market crash last year, losing nearly 65% of its value since the start of 2022. The electric car maker, once a Wall Street darling, saw its valuation drop from more than $1 trillion in October 2021 to less than 400 billion in December. Since then, the manufacturer has been trying painfully to get back on top, by cutting prices in an effort to increase sales.
Adding to this ugly patch is the rather negative impact of the Twitter takeover on Elon Musk’s image and his fortune. Last December, the emblematic businessman, who seemed to resist nothing, was even booed live by the audience on the set of a television program. Even in California, trouble flies in the squadrons.