(Bloomberg) -- Elon Musk settled into a San Francisco courtroom and had a laugh before closing arguments began in the trial over whether his 2018 tweets defrauded Tesla Inc. investors.
Before the jury arrived Friday, lawyers for the opposing sides were arguing to US District Judge Edward Chen, whose question about whether it's “metaphysically possible” for plaintiffs to prove a “material misrepresentation” prompted Musk to laugh out loud.
The levity didn't last long. Minutes later, a lawyer for the investors sternly told the jury that Musk's out-of-the-blue tweets in August 2018 about taking the electric-car maker private with “funding secured” ran afoul of basic requirements that every public company communicate with the market truthfully and accurately.
“This case is about whether rules that are applied to everyone should also be applied to Elon Musk,” said attorney Nicholas Porritt. “Billionaires don't get to operate under a different set of rules.”
Jurors have heard weeks of testimony about whether Musk's tweets amount to securities fraud, and whether he should be held liable for potentially billions of dollars in damages. Musk abandoned the take-private plan within a couple of weeks of tweeting about it — but by then, investors allegedly had suffered big losses from fluctuations in Tesla's stock price.
Investment banking witnesses previously testified that even a week after the tweets, they were still working to figure out how the deal would be structured, including who would pay for it.
Musk's central defense is that he knew he could raise as much as $60 billion to take Tesla private based on a handshake deal with Yasir Al-Rumayyan, the governor of Saudi Arabia's Public Investment Fund.
But Porritt told the jury that was a lie.
“The market understood ‘funding secured' to mean an actual commitment,” he said. In reality, Porritt said, a text exchange between Al-Rumayyan and Musk days after the tweets shows that the commitment didn't exist — and when the Saudi official said he needed more information, the Tesla CEO tried to bully him.
“Confirm my lie or I'll never speak to you again,” is how Porritt phrased the ultimatum he says Musk gave Al-Rumayyan.
The investors' lawyer said the “consequential harm” the tweets did is beyond dispute, pointing the jurors to testimony they heard from expert witnesses that Musk's pronouncements jolted the market. An economist testified this week that investors lost $12 billion over 10 days after the tweets — a figure that applies to all Tesla investors, which is a larger group than those who are part of the class-action lawsuit.
“The August 7 tweets are like an ice cube dropped in a glass of water,” Porritt said. “It immediately changes the temperature.”
The CEO spent a little more than two days on the witness stand, telling jurors that his “funding secured” tweet was “absolutely truthful.” He said that in addition to an “unequivocal” commitment by Saudi Arabia, he could have sold a stake in his rocket-ship company, SpaceX, to help finance the Tesla take-private transaction.
Alex Spiro, Musk's lawyer, told the jury as he began delivering his own closing argument that while the initial tweet was “technically inaccurate,” Musk was actively pursuing going private and “funding was not an issue.”
In re Tesla Inc. Securities Litigation, 18-cv-04865, US District Court, Northern District of California (San Francisco).
(Updates with plaintiffs' attorney's argument.)
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