Musk’s “erratic” tweets and the failure of Tesla directors to ensure he complied with the SEC settlement have exposed shareholders to billions of dollars in losses, according to a complaint unsealed late Thursday in Delaware Chancery Court, which also names the electric car company’s board of directors as defendants.
The complaint cited several Musk tweets, including his assessment last May 1 that Tesla’s stock price was “too high,” causing the company’s market value to plummet by more than $13 billion.
The plaintiff, Chase Gharrity, claims that Musk’s actions and the directors’ inaction have caused “substantial financial harm” to Tesla and that they should pay damages to the Palo Alto, California-based company.
Despite the fact that Tesla’s share price has increased nearly fivefold since Musk’s “too high” tweet, valuing the company at well over $600 billion, and the SEC has not publicly accused Musk of recent breaches, the lawsuit was lodged.
“It could put pressure on the SEC to take action,” said Charles Elson, a corporate governance expert and professor at the University of Delaware.
On Friday, Tesla did not immediately respond to requests for comment. Similar requests were not immediately responded to by Gharrity’s lawyers, Musk’s lawyers in the SEC case, or the SEC.
Musk’s August 2018 tweet that he had “funding secured” to potentially take Tesla private in a $72 billion deal prompted the SEC settlement. Musk, in reality, was not even close.