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    Jury selected for trial about Tesla buyout tweets

    SAN FRANCISCO (AP) – A nine-person jury was seated on Tuesday to hear a trial that will determine whether Tesla Chief Executive Officer (CEO) Elon Musk cheated investors by asserting in 2018 tweets that he had lined up financing to take the electric automaker private.

    The five-hour process set the stage for opening statements began yesterday in the case, which is expected to include testimony from Musk to explain his thinking while engaged in one of his favourite activities – tweeting on the Twitter service that he now owns. In the Tesla case, Musk’s tweets fuelled a rally in the company’s stock price that abruptly ended a week later after it became apparent that he did not have the funding for a buyout after all.

    Investors then sued him, saying that Tesla shares would not have swung so widely in value if he had not dangled the prospect of buying the company for USD420 per share.

    Musk’s tweet also attracted the attention of securities regulators, who concluded that it was improper and that he was lying. In a settlement, they forced him to pay USD40 million and required him to step down as Tesla chairman.

    He has since contended that he entered the settlement under duress and maintains that he believed he had locked up financial backing for the buyout during meetings with representatives from Saudi Arabia’s Public Investment Fund.

    A legal aide arrives for the Elon Musk shareholder lawsuit trial at the Phillip Burton Federal Building in San Francisco. PHOTO: AFP

    Even while he has been making major changes at Twitter, Musk continues to serve as CEO at Tesla and derives most of his wealth and fame from the company.

    The trial hinges on an August 7, 2018 tweet in which Musk claimed he had lined up financing to pay for a USD72 billion buyout of Tesla, which he then amplified with a follow-up statement that made a deal seem imminent.

    But the buyout never materialised, and now Musk will have to explain his actions under oath in a federal court in San Francisco. The class-action lawsuit was filed on behalf of investors who owned Tesla stock for a 10-day period in August 2018.

    The trial’s outcome may turn on the jury’s interpretation of Musk’s motive for the tweets, which United States (US) District Judge Edward Chen has already decided were false.

    The judge dealt Musk another setback last Friday, when he rejected Musk’s bid to transfer the trial to a federal court in Texas, where Tesla moved its headquarters in 2021. Musk had argued that negative coverage of his Twitter purchase had poisoned the jury pool in the San Francisco Bay Area.

    The challenge of finding jurors without strong feelings about Musk became evident during Tuesday’s painstaking selection process.

    At one point, the judge flagged some prospective jurors who had expressed extreme misgivings or enthusiasm about Musk in pre-trial questionnaires. Seven jurors were questioned individually, away from the rest of the jury pool, to reduce the chances of influencing the opinions of others in the courtroom.

    Chen and lawyers for both the shareholders and Musk ended up grilling seven of those jurors, who variously described Musk as “arrogant”, “narcissistic”, “unpredictable”, “a little off his rocker”, “a mercenary” and “a genius”.

    Musk’s leadership of Twitter – where he has gutted the staff and alienated users and advertisers – has proven unpopular among Tesla’s current stockholders, who are worried that he has been devoting less time to automaker at a time of intensifying competition.

    Those concerns contributed to a 65 per cent decline in Tesla’s stock last year that wiped out more than USD700 billion in shareholder wealth – far more than the USD14 billion swing in fortune that occurred between the company’s high and low stock prices from August 7-17, 2018, the period covered in the lawsuit.

    Tesla’s stock has split twice since then, making that USD420 price worth USD28 on adjusted basis now. The shares closed last week at USD122.40, down from the company’s November 2021 split-adjusted peak of USD414.50.

    After Musk dropped the idea of a Tesla buyout, the company overcame a production problem, resulting in a rapid upturn in car sales that caused its stock to soar and made Musk the world’s richest person until he bought Twitter.

    Musk dropped from the top spot on the wealth list after a stock market backlash to his handling of Twitter.

    The trial is likely to provide insights into Musk’s management style, given that the witness list includes some of Tesla’s current and former top executives and board members, including luminaries such as Oracle co-founder Larry Ellison and James Murdoch, the son of media mogul Rupert Murdoch.

    The drama may shed light on Musk’s relationship with his brother, Kimbal, who is also on the list of potential witnesses. The trial is expected to last until early February.

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