SAN FRANCISCO, Jan 18 (Reuters) - Tesla Inc CEO
Elon Musk "lied" when he said that funding was "secured" to take
the company private, a lawyer for Tesla investors said on
Wednesday, as an attorney for Musk argued that the billionaire
merely used the "wrong words" when he tweeted about his plans in
Tesla investor Glen Littleton is seeking damages on behalf
of shareholders who traded the company's stock in the days after
Musk posted his plan to take the company private on Twitter in
Musk's alleged lies caused "regular people" to lose
millions, Nicholas Porritt, lead attorney for the investors,
told a jury in San Francisco during opening statements.
"Millions of dollars were lost when his lies were exposed,"
Musk's lawyer disputed this characterization, saying that
the billionaire was "serious" about taking the company private
in 2018, but ultimately encountered shareholder opposition.
"You will come to learn very soon that this was not fraud,
not even close," Alex Spiro said during opening statements.
Musk believed that financing was not an issue and was
"taking steps" to make a deal happen, Spiro told the jury.
While the tweets contained "technical inaccuracies," Musk
was concerned that some investors knew about his go-private plan
and wanted to get the information out to the "everyday
shareholder" that he "wanted to protect," Spiro said.
"In a rush, he used the wrong words," he said.
The case is a rare securities class action trial, and Musk
and his company are bucking the norm of settling claims that
clear high legal hurdles, making for a potentially dramatic
trial at which Musk himself is expected to take the stand as
early as this week.
A jury of nine will decide whether the tweets artificially
inflated Tesla's share price by playing up the status of funding
for the deal, and if so, by how much.
The defendants include current and former Tesla directors,
whom Spiro said had "pure" motives in their response to Musk's
Testimony concluded on Wednesday after nearly three hours
from the first witness, Littleton. The trial will resume on
Friday with an expert witness and might include Musk taking the
Littleton said he began investing in Tesla in 2015 as Musk
was "bringing new ideas to life" in the technology industry.
The self-employed investor said he viewed Musk's "funding
secured" statement as "absolute."
Littleton said he scrambled to unwind his Tesla options
positions, which the tweet made unprofitable.
On cross-examination, William Price, who represents the
defendants, sought to show Littleton was motivated by Musk's bid
to take Tesla private, and not on "funding secured," which is
what the lawsuit challenges as fraudulent.
U.S. District Judge Edward Chen, who is overseeing the
trial, has ruled that Musk's statements about the status of the
deal were false and Musk made them recklessly. The deal did not
While shareholders sue hundreds of companies and their
executives for alleged securities fraud every year, very few of
those cases make it to trial. The vast majority are either
dismissed by courts or settle.
Not among the jurors selected on Tuesday were some critics
of Musk, such as one potential juror who said the chief
executive, who has gained a reputation for the unpredictable,
was "a little off his rocker."
(Reporting by Jody Godoy in San Francisco
Additional reporting by Tom Hals in Wilmington, Del.
Editing by Peter Henderson, Noeleen Walder and Matthew Lewis)