‘They have forced this issue into litigation,’ says JP Morgan
JP Morgan Chase is suing Tesla for $162m over tweets made by CEO Elon Musk in 2018 that claimed he could take the company private.
The banking company has accused Musk and Tesla of “flagrantly” breaching a deal it claims should have triggered payments to JP Morgan, reports the BBC.
So were the tweets really that bad?
Musk’s tweets, sent on August 7 2018, said he had sufficient funding to take Tesla off the New York stock market and charge $420 a share, which resulted in a volatile share price. Then, once he had abandoned the move only 17 days later, he was fined by the US financial regulator.
Though Musk denied the allegations, he was eventually forced to step down as chairman, and Tesla paid $40m in penalties.
The suit, which has been filed at the Manhattan federal court, claims that the two companies signed an agreement in 2014 that permitted the banking group to buy shares from Tesla at a set price and date.
The deal also meant that the car manufacturer sold “warrants” to JP Morgan that allowed the group to buy shares if the “strike” price was beneath Tesla’s share price when the “warrants” ended in July 2021.
“We have provided Tesla multiple opportunities to fulfil its contractual obligations, so, unfortunately, they have forced this issue into litigation,” a spokesperson for JP Morgan said.
JP Morgan said the warrants contained standard provisions that allowed it to adjust its price to protect both parties against the economic effects of “significant corporate transactions involving Tesla,” such as an announcement the company was going private.
Tesla has yet to comment on the lawsuit but in 2019 they called the banking group “opportunistic” to take advantage of the volatile share price.
Related links:
- Jake Paul promises to donate $10m to end world hunger if Musk gives his $6b
- Elon Musk’s wealth spikes $13.4B in one day, making him richer than Finland’s entire GDP
- Musk sets out UN conditions for $6B Tesla stock donation to end world hunger
