The Civil Case over Elon Musk's 420 Pledge Essay

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Crimes in the Business WorldElon Musk and Tesla are being sued in civil court for securities fraud as a result of Musk, acting as CEO of the company, Tweeting that he had funding secured to take Tesla private at $420 a share. The stock price immediately leapt, which hurt short sellers, and then the share price crashed when Musk confessed that he did not in fact have funding secured. The Board did not know of Musk’s intentions when he made his claims on Twitter; however, the Board does have a role to play in the self-regulation of the company. The Board must demonstrate corporate management, so as to show that the company “is not engaging in actions harmful to the interest of shareholders and is not engaged in unwarranted forms of self-dealing” (Friedrichs 305). Because Musk was acting on his own when he informed shareholders of the false news of taking Tesla private, the company sought to have the case dismissed. U.S. District Judge Edward M. Chen in San Francisco refused to toss the case and is allowing it to go forward. He stated clearly that “the rise and fall of Tesla’s stock prices corroborated with the timing of the alleged false and misleading statements, all of which occurred within a less-than-two-week period, and which suggests Mr. Musk’s false statements were the proximate cause” (Mitchell). Shareholders and short sellers are behind the civil suit and seek recompense for what they view as securities fraud on the part of Musk and Tesla.Musk had been in a war of words with short sellers in the days leading up to his now notorious Tweet that shook the world of Tesla longs and shorts.

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Many big fund managers had been vocal about Musk’s management of Tesla and had called for the…

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…settled its suit with Musk out of court, shareholders and short sellers saw that they needed to file a civil suit in order to obtain justice.In a civil case, the prosecution merely has to show that there is a preponderance of evidence showing that the defendant is responsible for the losses accrued by the litigants. The Judge who allowed the trial to go forward appeared to side with those suing Musk and Tesla, for he saw a clear connection between Musk’s Tweets, the movement of the company’s share price, and the possibility of losses incurred by both longs and shorts of Tesla’s stock. As this is a trial still in development, the final outcome is uncertain; but what is known is that in a civil trial, one does not have to prove anything beyond a reasonable doubt. One only needs to show enough evidence that a jury will conclude that….....

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"The Civil Case Over Elon Musk's 420 Pledge" (2021, September 08) Retrieved May 15, 2024, from
https://www.aceyourpaper.com/essays/civil-case-elon-musk-420-pledge-2176605

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"The Civil Case Over Elon Musk's 420 Pledge" 08 September 2021. Web.15 May. 2024. <
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"The Civil Case Over Elon Musk's 420 Pledge", 08 September 2021, Accessed.15 May. 2024,
https://www.aceyourpaper.com/essays/civil-case-elon-musk-420-pledge-2176605
   

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