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Elon Musk Says He Had Saudi "Support" to Take Tesla Private

Tesla CEO is responding to a class action lawsuit from shareholders claiming to be wronged by the billionaire's tweets on Aug. 7, 2018.
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Elon Musk does not budge. The billionaire is sticking to his position in the Tweetgate affair, which has already cost him and Tesla  (TSLA) - Get Free Report a $40 million fine from the SEC.

He said, in an update of court documents filed by his lawyers in a California court, that he was neither disingenuous nor in bad faith with respect to investors.

"Plaintiff has litigated this case for nearly three years, taken numerous depositions, received hundreds of thousands of pages of documents, and now must contend with one basic truth: Elon Musk’s August 7, 2018 tweet informing the public that he was considering taking Tesla private was entirely truthful and cannot support the claims that Plaintiff brings—much less a motion for summary judgment," lawyers for the billionaire said in an updated motion filed with the U.S. District Court for the Northern District of California in San Francisco.

"Mr. Musk was considering taking Tesla private at $420 a share. Funding was secured. There was investor support. These conclusions are supported by extensive contemporaneous evidence, including discussions with Saudi Arabia’s sovereign wealth fund (the “PIF”) and Tesla’s Board, as well as the undisputed fact that there was sufficient funding for a go-private transaction, from the PIF or otherwise," Musk's lawyers added.

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Musk Faces a Class-Action Lawsuit

Musk faces disgruntled investors, who believe they have been wronged and punished by the billionaire's tweet. They have therefore filed a class-action lawsuit and a jury trial is expected to begin on May 31, 2022, according to the lawsuit. A hearing is scheduled in March.

A settlement between the two parties cannot be ruled out.

The Tweetgate affair started on Aug. 7, 2018 with this post by Musk on his Twitter account. It should be noted that the billionaire is the face and often the main spokesperson for the manufacturer of electric vehicles.

He added another tweet, telling shareholders they had a choice to sell their shares at $420 or hold.

Musk Reached a Settlement With the SEC

The tweets had shaken Tesla stock.

The Securities and Exchange Commission filed a complaint against Elon Musk.

"The SEC’s complaint alleged that, in truth, Musk knew that the potential transaction was uncertain and subject to numerous contingencies. Musk had not discussed specific deal terms, including price, with any potential financing partners, and his statements about the possible transaction lacked an adequate basis in fact," the federal agency said back then.

"Musk’s misleading tweets caused Tesla’s stock price to jump by over six percent on August 7, and led to significant market disruption," the agency added.

A settlement was reached and announced on Sept. 29, 2018. It required Musk to step down as Tesla’s chairman. Tesla and Musk agreed to pay $40 million in penalties.

In their heavily redacted filing on Tuesday, Elon Musk's lawyers say that: "Far from 'fraud,' Mr. Musk’s statements were an effort to be open about a potential go-private transaction and to provide equal information to all Tesla shareholders. Plaintiff has no valid claims, never mind ones that can be decided in his favor on summary judgment." 

They argued that the Saudi fund,  PIF,  is "well known for orally committing and moving quickly in making large investments." Basically, it shouldn't come as a surprise if there was no paper trail.