Elon Musk expected big financial backing when he tweeted that he would take part in Tesla in 2018, but there were no concrete commitments from potential backers, according to testimony he gave on the third day of questioning in federal court in San Francisco.
Musk has been accused of defrauding investors by driving up Tesla’s stock price by tweeting on August 7, 2018 that he had “secured financing” to take the electric car maker private.
The trial is testing whether the world’s second-richest man can be held accountable for his use of Twitter. Millions of dollars are at stake for shareholders who claim they suffered losses after Musk tweeted that “investor support confirmed” for the deal.
Tesla’s stock price rose after Musk’s tweets and later fell as it became clear that the acquisition would not happen.
Musk told a jury on Tuesday that he could have tapped several sources of funding to take Tesla private, from existing shareholders such as Oracle Corp co-founder Larry Ellison to Saudi Arabia’s sovereign wealth fund or his own wealth.
“Funding was absolutely not an issue,” Musk said. “It was the complete opposite.”
Musk, however, has acknowledged that he has no binding contracts with investors, leaving it up to a jury to decide whether he misled shareholders.
A nine-person jury will decide whether Tesla’s CEO artificially inflated the company’s stock price by touting buyout prospects.
In response to questions from his attorney, Alex Spiro, Musk said his tweet was intended to inform investors of his interest in taking Tesla private. Musk said he has already discussed his interest with Tesla’s board and Saudi Arabia’s sovereign wealth fund, and he’s worried it will come out in the media.
“I had no bad motive,” he said. “My intention here was to do the right thing for the shareholders.”
The Saudi Arabian Foundation did not immediately respond to Reuters’ request for comment.
Musk told the jury he decided to abandon the idea of taking the company private after receiving feedback from shareholders.
“After speaking with a number of investors, especially small investors, they said they would prefer Tesla to remain public, and I felt it was important to respond to their wishes,” Musk testified.
The jury was shown board meeting notes and documents after tweets in which Goldman Sachs, which was working on the proposed deal with Musk, said there would be more than enough funding to take the company private.
Goldman Sachs did not immediately respond to a request for comment.
But when questioned by investor attorney Nicholas Porritt, Musk said he had no binding financing agreements with any interested parties.
Musk repeatedly objected to the yes or no answers Porritt sought about the discussions surrounding the Saudi Arabian fund’s funding pledges, prompting the judge to assist the questioning at one point.
“Was a specific number discussed?” the judge asked.
“Not a specific number,” Musk said.
On Monday, Musk said he could finance the deal by selling his stake in SpaceX, the aerospace company where he is also chief executive. He also said he believed the funding was promised by a Saudi foundation before they backed out.
The tweet has already resulted in a $40 million settlement with securities regulators.
After it became clear that the money was not intended to take Tesla private, Musk stepped down as Tesla’s chairman while remaining CEO under a Securities and Exchange Commission settlement, admitting no wrongdoing.
The trial is scheduled to continue next week with testimony from Tesla board members and experts.
Reuters contributed to this report