JPMorgan Chase Sues Tesla for $162 Million Over Elon Musk Tweet

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JPMorgan Chase & Co. has filed a lawsuit against Tesla, for the amount of $162.2 million, reports Reuters.

The issue at stake? According to JPMorgan’s lawsuit filed in Federal Court in Manhattan, the investment firm alleges Tesla breached a contract related to stock warrants, after CEO Elon Musk tweeted in 2018 there was “funding secured” to take the electric automaker private.

“Tesla entered warrant transactions that required it to deliver shares of its stock or cash if its share price was above the contractual “strike price” when the warrants expired,” reports Reuters on the filing.

JPMorgan Chase says after Musk tweeted on August 7, 2018, the warrants it owned lost substantial value, even after they had expired in June and July of 2021.

The largest U.S. bank said the warrants lost substantial value after Musk’s Aug. 7, 2018 tweet that Tesla had “funding secured” to go private at $420 per share, and remained well below Tesla’s share price upon expiring in June and July 2021.

“JPMorgan demanded the due shares or cash, but Tesla has flagrantly ignored its clear contractual obligation to pay JPMorgan in full,” reads the complaint. “JPMorgan brings this action to enforce its right to payment.”

“Am considering taking Tesla private at $420. Funding secured,” said Musk back in August of 2018. “Shareholders could either to sell at 420 or hold shares & go private,” added the Tesla CEO.

A complaint was also filed to the Securities and Exchange Commission over the Musk tweet, that affected Tesla’s stock price.

“The total package of remedies and relief announced today are specifically designed to address the misconduct at issue by strengthening Tesla’s corporate governance and oversight in order to protect investors,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division, in delivering a September 2018 judgement.

“As a result of the settlement, Elon Musk will no longer be Chairman of Tesla, Tesla’s board will adopt important reforms —including an obligation to oversee Musk’s communications with investors—and both will pay financial penalties,” added Steven Peikin, Co-Director of the SEC’s Enforcement Division. “The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders.”

Tesla never went private and currently, the company’s stock price is worth $1,013.39 per share (after a 5-for-1 split).

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