Elon Musk expected strong financial backing when he tweeted he would take Tesla private in 2018, but lacked specific commitments from potential backers, according to testimony he gave during his third interrogation day in federal court in San Francisco.
Musk is accused of defrauding investors by driving up Tesla’s stock price by tweeting on August 7, 2018 that he had “secure funding” to take the electric carmaker private.
The lawsuit tests whether the world’s second richest person can be held liable for his use of Twitter. Millions of dollars are at stake for shareholders who say they suffered losses after Musk tweeted that “investor support is confirmed” for the deal.
Tesla’s stock price surged after Musk’s tweets, then fell when it became clear the takeover wouldn’t happen.
Musk told the jury on Tuesday that he could have tapped into multiple sources of funding to take Tesla private, from existing shareholders like Oracle Corp co-founder Larry Ellison, to the Saudi sovereign wealth fund or his own fortune.
“Funding was absolutely not an issue,” Musk said. “It was quite the opposite.”
Musk, however, acknowledged that he had no binding agreements with investors, leaving it up to the jury to decide whether he misled shareholders.
A nine-person jury will decide whether Tesla’s CEO artificially inflated the company’s stock price by touting takeover prospects.
Responding to questions from his lawyer Alex Spiro, Musk said his tweet was meant to inform investors of his interest in taking Tesla private. Musk said he had previously discussed his interest with Tesla’s board and Saudi Arabia’s sovereign wealth fund and was concerned it would leak to the media.
“I had no bad motive,” he said. “My intention here was to do the right thing for the shareholders.”
The Saudi fund did not immediately respond to a Reuters request for comment.
Musk told the jury he decided to drop the idea of taking the company private after getting feedback from shareholders.
“After talking to a number of investors, especially retail investors, they said they would prefer a Tesla that remained public and I felt it was important to accommodate their wishes,” Musk said. .
The jury saw notes and documents from a board meeting in the days following the tweet in which Goldman Sachs, who was working with Musk on the proposed deal, said there would be more enough financing to privatize the company.
Goldman Sachs did not immediately respond to a request for comment.
But when questioned by Nicholas Porritt, an attorney for the investors, Musk said he had no binding agreements for funding from any interested parties.
Musk has repeatedly resisted “yes” or “no” answers demanded by Porritt over talks of funding pledges from the Saudi fund, prompting the judge at one point to help with the questioning.
“Was a specific number discussed? asked the judge.
“Not a specific number,” Musk said.
On Monday, Musk said he could have funded the deal by selling his stake in SpaceX, the aerospace company of which he is also chief executive. He also said he believed the funding had been promised by the Saudi fund, before it backtracked.
The tweet has already resulted in a $40 million settlement with securities regulators.
After it became apparent that the money was not in place to take Tesla private, Musk resigned as Tesla chairman while remaining CEO under the Securities and Exchange Commission settlement, without acknowledging any wrongdoing.
The trial is expected to continue next week with testimony from Tesla board members and experts.
Reuters contributed to this report