TheCorporateCounsel.net

Last week, a jury in a securities class action lawsuit found in favor of Elon Musk for his 2018 “funding secured” tweet – in which he said he was considering taking Twitter private at $420 per share and had locked in the funding. Here’s a NYT article about the outcome. The SEC had also taken issue with those tweets, resulting in a $40 million settlement and the “Twitter sitter” – plus a lot of animosity from Elon towards the Commission.

All I can say is that I’m nearly as happy as Elon that we can finally put this saga to bed. There’s no real takeaway for other companies because the jury’s verdict appeared to rest on the determination that nobody takes Elon Musk’s tweets all that seriously – and at the same time, they trust him to get things done when he really wants to.

So, investors truly may not have cared if instead of “funding secured,” the tweet had said “I might have a handshake deal for funding” – because it’s Elon Musk and he’ll either bring in the money when he wants to, or the whole thing was a joke in the first place. Did the statement really cause people to buy Tesla stock at an inflated price? The jury apparently was not convinced of that.

The reason this doesn’t translate well to other companies is that Elon Musk has carefully (or not-so-carefully?) cultivated a free-wheeling, Teflon persona and a cult-like following. It would be difficult & risky for other public company CEOs to emulate that. We don’t give legal advice in this blog, but common sense says it’s a bad idea for others to try “going private; funding secured” announcements without a commitment letter in-hand.

– Liz Dunshee