The Civil Case Over Elon Musk's 420 Pledge Essay

Length: 3 pages Subject: Business Type: Essay Paper: #60972689 Related Topics: Stock, Tesla, Trial, Stock Price
Excerpt from Essay :

Crimes in the Business World

Elon 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 Musks 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 Franciscorefused to toss the case and is allowing it to go forward. He stated clearly that the rise and fall of Teslas 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. Musks 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. Many big fund managers had been vocal about Musks management of Tesla and had called for the…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 Musks Tweets, the movement of the companys share price, and the possibility of losses incurred by both longs and shorts of Teslas 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…

Sources Used in Documents:

Works Cited

Friedrichs, D. Trusted Criminals: White Collar Crime In Contemporary Society.  Cengage Learning, 2009.

Levine, M. “Elon Musk’s funding.” Bloomberg, August, 13, 2018.

Mitchell, Russ. “Judge deems Musk’s ‘funding secured’ tweet false and misleading. A trial awaits.” Los Angeles Times, April 15, 2020.

Cite this Document:

"The Civil Case Over Elon Musk's 420 Pledge" (2021, September 08) Retrieved January 21, 2022, from

"The Civil Case Over Elon Musk's 420 Pledge" 08 September 2021. Web.21 January. 2022. <>

"The Civil Case Over Elon Musk's 420 Pledge", 08 September 2021, Accessed.21 January. 2022,

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