By Nathalie Voit
A group of Tesla shareholders asked a federal judge on April 15 to issue a temporary restraining order against Elon Musk to stop him from commenting on a 2018 civil securities fraud case, according to court documents filed on Friday.
The stockholders are suing Tesla over money they lost after the CEO tweeted on Aug. 7, 2018, that he had the funding secured to take the electric vehicle company private at $420 per share. However, the deal failed to materialize, and many investors lost money following “significant market disruption.”
As a result of those tweets, the SEC launched an investigation into the matter and charged Musk with securities fraud. Tesla and Musk agreed to pay $40 million in penalties in a settlement agreement with the agency in September 2018.
Shareholders who are now trying to recover losses from the class-action lawsuit allege Musk is attempting to influence potential jurors in the case. The shareholders point to Musk’s statements during an interview on April 14 at the TED 2022 conference, in which he claimed he had the funding to take Tesla private in 2018.
According to Edward M. Chen, the federal judge presiding in the case, Musk’s comments violate the 2018 court settlement with U.S. securities regulators.
Musk was ordered not to “take any action or make or permit to be made any public statement denying, directly or indirectly, any allegation in the complaint or creating the impression that the complaint is without factual basis” as part of the SEC agreement.
The judge also concluded Musk acted with scienter – that is, Musk knowingly made false claims about having funding secured when he wrote those tweets in 2018.
The lawyers for the Tesla shareholders asked the judge to restrain Musk from making further public comments about the case until after a trial is held.
“Musk’s comments risk confusing potential jurors with the false narrative that he did not knowingly make misrepresentations with his Aug. 7, 2018 tweets,” the lawyers wrote, according to the Associated Press. “His present statements on that issue, an unsubtle attempt to absolve himself in the court of public opinion, will only have a prejudicial influence on a jury.”
A date for the trial is currently scheduled for May 31, 2022, in a San Francisco federal court.
The news comes days after the billionaire entrepreneur offered to buy Twitter for $43 billion.