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This Tweet Led to a Lawsuit Against Elon Musk

Elon Musk and Tesla directors face a lawsuit from current and former shareholders.

Tesla  (TSLA) - Get Free Report CEO Elon Musk, who purchased Twitter on Oct. 27 for $44 billion, has a history of tweeting on the social media site long before he owned the company.

Musk, who refers to Twitter as the town square of our time, has been controversial in many of his tweets, and one particular message back on Aug. 7, 2018, already cost him millions in Securities and Exchange Commission fines and forced him to step down as Tesla chairman.

Musk reached a settlement with the SEC on Sept. 29, 2018, which required the CEO and Tesla to each pay a $20 million fine and for Musk to step down as chairman for tweeting that he could take Tesla private at $420 per share and buy out the company for $72 billion.

Elon Musk Writes a Costly Tweet

"Am considering taking Tesla private at $420. Funding secured." Musk tweeted on Aug. 7, 2018.

Just days later on Aug. 10, 2018, investors sued Musk and Tesla alleging the statement that the company had the necessary funding to take the company private was fraudulent and that Musk and Tesla were artificially manipulating the price of Tesla stock "to completely decimate the company’s short-sellers," according to Courthouse News Service.

The plaintiffs seek damages for shareholders who traded Tesla stock in the days after Musk’s tweets, as shares shot up immediately after Musk's tweet, then fell on Aug. 17. Plaintiffs did not list an amount for damages. 

Fast-forward to Jan. 17, 2023 and jury selection has begun in the U.S. District Court for the Northern District of California in San Francisco for the trial. Opening arguments reportedly could get underway Tuesday once the jury is selected.

The defendants, which include Musk and current and former Tesla directors, have denied the alleged fraud claims.

Musk's lawyers earlier requested a change of venue to Texas where Tesla is headquartered, but were denied by U.S. District Judge Edward Chen.