Tesla boss Elon Musk must face a shareholder lawsuit over a tweet in which he stated the company had secured funding for a go-private deal worth $72bn (£58bn), a judge has ruled.
Shareholders have filed a suit alleging the billionaire founder attempted to defraud them with a 2018 tweet that read: “Am considering taking Tesla private at $420. Funding secured.”
Musk had argued the tweet was not false or misleading because Tesla’s directors would still have been required to approve the transaction.
But US district judge Edward Chen yesterday ruled investors could push ahead with the lawsuit.
He said they could also try to prove that Musk’s tweet was the “proximate cause” of volatility in Tesla’s share price that caused billions of dollars of losses.
Shares in Tesla rose 13 per cent following the tech boss’ shock tweet, but these gains were soon reversed and 10 days later the stock was 11 per cent lower than it had been before the tweet.
Some investors have accused Musk of deliberately trying to harm short sellers who were betting Tesla’s shares would fall.
Three weeks after the message, Musk tweeted that Tesla would remain private.
The US Securities and Exchange Commission fined Musk $20m to settle fraud charges and forced him to step down as chairman.
The regulator also required Tesla lawyers to vet some of the founder’s tweets and hit the company with a separate $20m fine.