Elon Musk expected strong financial backing when he tweeted that he would take Tesla private in 2018, but he lacked specific commitments from potential backers, according to testimony he gave on his third day of questioning in federal court in San Francisco.
Musk is accused of defrauding investors by raising the price Tesla He tweeted on August 7, 2018 that he had secured “funding secured” to take the electric car maker private.
The trial is testing whether the second richest person in the world can be held responsible for his use of Twitter. At stake are millions of dollars for shareholders who claimed losses after Musk tweeted that “confirmed investor support” for the deal.
Tesla’s stock price soared after Musk’s tweets, and later fell as it became clear that the takeover wasn’t going to happen.
Musk told the jury on Tuesday that he could have drawn on several sources of funding to take Tesla private, from existing shareholders like Oracle Corp co-founder Larry Ellison to Saudi Arabia’s sovereign wealth fund or his own wealth.
“Funding has never been an issue,” Musk said. “It was just the opposite.”
However, Musk has acknowledged that he has no binding agreements with investors, leaving it up to the jury to decide whether he misled shareholders.
A nine-member jury will decide whether the Tesla CEO artificially inflated the company’s share price by touting buying prospects.
In response to questions from his attorney Alex Spiro, Musk said his tweet was intended to inform investors of his interest in taking Tesla private. Musk said he has already discussed his interest with the board of directors of Tesla and the Saudi sovereign wealth fund, and fears that this could leak to the media.
“I didn’t have a bad motive,” he said. “My goal here was to do the right thing for shareholders.”
The Saudi fund did not immediately respond to a Reuters request for comment.
Musk told the jury that he decided to drop the idea of taking the company private after receiving feedback from shareholders.
Musk testified, “After speaking to a number of investors, especially small investors, they said they’d prefer a Tesla that remains public and I felt it was important to accommodate their wishes.”
The jury was shown notes and documents from the board meeting in the days after the tweet in which Goldman Sachs, which had been working with Musk on the proposed deal, indicated there would be more than enough funding to take the company private.
Goldman Sachs did not immediately respond to a request for comment.
But when asked by Nicholas Porritt, an attorney for the investors, Musk said he had no binding agreements for financing from any interested party.
Musk repeatedly resisted Porritt’s “yes” or “no” answers about discussions about funding pledges by the Saudi fund, prompting a judge at one point to assist in cross-examination.
“Has a particular number been discussed?” the judge asked.
“It’s not an exact number,” Musk said.
On Monday, Musk said he could have funded He closed the deal by selling his stake in SpaceX, the aerospace company where he is also CEO. He also said he believed the Saudi fund had pledged financing before backing down.
The tweet has already led to a $40 million settlement with stock regulators.
After it became clear that the funds weren’t available to take Tesla private, Musk stepped down as chairman of Tesla while remaining CEO as part of the SEC settlement, without admitting any wrongdoing.
The trial is scheduled to continue next week with testimony from Tesla board members and experts.
Reuters contributed to this report