Elon Musk’s Twitter buyout odyssey is on investors' minds as the Friday court deadline for the $44-billion deal draws closer.
Musk almost broke the internet when he announced his plans to take Twitter (NYSE:TWTR) private in April. But the magnate is still facing several lawsuits from a 2018 tweet in which he announced plans to take Tesla (NASDAQ:TSLA) private at $420 a share.
A new lawsuit related to that event was filed last week.
Musk’s Infamous 420 Tweet
The tweet said that funding for a take-private deal was secured. Musk’s lawyers said in a court filing earlier this year the Saudi Arabia’s sovereign wealth fund was in line to support the purchase.
Related: Is Elon Musk A Winner Or Loser If He Acquires Twitter? 41% Of Benzinga Followers Say…
The infamous 420 tweet was perceived by some as a marijuana-related joke, and it was posted only one month before the billionaire smoked weed publicly on Joe Rogan’s podcast.
Joke or not, the tweet cost Musk and Tesla $40 million in SEC fines; $20 million of itfrom his own pocket. According to the SEC, Musk knew the potential transaction was “uncertain and subject to numerous contingencies.”
The SEC’s complaint was that “Musk’s misleading tweets caused Tesla’s stock price to jump by over six percent on August 7, and led to significant market disruption.”
The tweet also cost Musk his chairmanship of the company.
Shareholder Lawsuits Over Musk’s 420 Tweet Are Ongoing
More than four years later, Musk’s public statements continue to haunt him and the electric vehicle manufacturer. For several shareholders, Musk’s 420 tweet caused unprecedented volatility, potentially causing billions in losses.
The company’s latest SEC filing, posted earlier this week, shows that several lawsuits “relating to [a] potential going private transaction” continue to be unresolved.
Between August and September 2018, nine class actions were filed against Tesla and Musk by stockholders in connection with his 420 tweet.
All of those suits remain pending in the U.S. District Court for the Northern District of California.
The complaints vary, but they all share one common ground: they demand compensatory damages that are unspecified in the SEC filing but likely amount to millions.
The plaintiffs consolidated their complaints and added Tesla’s board of directors as defendants in 2019. After three years of legal twists and turns between Tesla and stockholders, a trial date has been set for Jan. 17, 2023.
Several other derivative lawsuits were filed in the Delaware Court of Chancery, which is the same court handling the class action Twitter filed against Musk to fulfill his offer for the social media platform. These have been halted and are pending resolution of the main trial.
A separate lawsuit from Oct. 21, 2022, also filed in Delaware by Tesla shareholders, alleges that board members breached their fiduciary duties in connection with their oversight of the company’s 2018 settlement with the SEC. It seeks reforms to Tesla’s corporate governance and internal procedures as well as unspecified damages.
Tesla has said that it believes the claims have no merit and intends to defend against them vigorously.
“We are unable to reasonably estimate the possible loss or range of loss, if any, associated with these claims,” according to the company.
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