JPMorgan sues Tesla, alleging CEO Elon Musk posted $250M in damage after tweets

JPMorgan is suing Tesla in Delaware, alleging that the firm suffered nearly $250 million in “material damages” after Elon Musk used tweets to announce that he had secured funding to take the company private….

JPMorgan sues Tesla, alleging CEO Elon Musk posted $250M in damage after tweets

JPMorgan is suing Tesla in Delaware, alleging that the firm suffered nearly $250 million in “material damages” after Elon Musk used tweets to announce that he had secured funding to take the company private.

Musk took to Twitter last week to announce that he had secured a deal that would take Tesla private for $420 per share, which represented a 38 percent premium to the share price. His announcement sent Tesla’s shares up more than 11 percent before the deal was put on hold.

Several Tesla directors had urged Musk to delay announcing his plans, but Musk had insisted that he would not rescind the offer.

The lawsuit alleges that JPMorgan & Chase & Co. and CEO Jamie Dimon were both “well aware” of the private acquisition talks in which Tesla was engaged.

The lawsuit claims that Musk, along with Tesla’s leadership team, knew that media reports claiming to have brokered a deal were false.

“As the Chief Executive Officer of Tesla, the Chairman of Tesla’s Board of Directors, and a director of the Compensation Committee, Dimon should have known about the misinformation from Musk and the emails at issue in this lawsuit,” according to the lawsuit.

In an interview last week with NBC’s “Meet the Press,” Musk dismissed claims that his Friday announcement was based on private talks.

“The deal was already done before, at that price,” Musk said. “It was just I disclosed it to have my say, so when everybody else saw it, that’s when they reacted.”

The company’s shares dropped Monday after the suit was filed.

“The shares sold today could not have reflected the fact that the deal was in process or that Elon Musk was going to make an impulsive statement that changed the terms,” Consumer Reports said.

S&P downgraded the company’s credit rating on Monday, citing execution risk.

Elon Musk and Tesla were also sued by an investor, the Public Employees’ Retirement System of Mississippi, who claimed they broke federal securities laws.

The Mississippi retirement fund filed a separate lawsuit in Nevada, claiming the company knew about plans for the company to pursue a leveraged buyout, yet filed documents with the SEC using private messaging.

“Its public relations violations have been the focus of U.S. regulators as well as the Securities and Exchange Commission, but Tesla’s own conduct is also clearly an issue,” Louisiana-based securities lawyer Paul Recht, who did not represent the Mississippi retirement fund, said in a statement.

Additional reporting by the Associated Press.

This story contains material from Reuters.

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