Tesla’s former chair says that she would have resigned if she had known Musk had lied in his tweets in 2018
Tesla’s former chair says that she would have resigned :- In a securities fraud trial on Friday, the board chair of Tesla Inc (TSLA.O) supported CEO Elon Musk, telling jurors that she would have resigned as a director if she had believed Musk had lied when he tweeted in 2018 that he had “funding secured” to take Tesla private.
Along with Musk, Tesla, and other directors, Robyn Denholm, who is the chair of the Tesla board, is named as a defendant in the lawsuit. Investors say they lost billions of dollars because Musk tweeted on August 7, 2018, that he had “secured funding” and “confirmed investor support” to take Tesla private at $420 per share, which was a 23% increase from the previous day’s close.
Tesla’s stock initially surged and then fell as it became clear that the buyout would not happen.
At the time of the tweets, Denholm led Tesla’s audit committee, which oversees company controls meant to ensure compliance with securities law.
She took the stand for around 30 minutes on Friday, saying that she would have quit if she had thought the tweets contained any type of false information.
“If I believed that Elon was trying to mislead the public I would have stood down from the board,” she said.
Musk agreed to renounce his position as board chairman in 2018 as part of a deal with the U.S. Securities and Exchange Commission, which contended that Musk’s tweets were fraudulent.
He and Tesla also paid $40 million in penalties to settle the allegations. They did not admit wrongdoing.
Denholm said that as the potential buyer, Musk was free to tweet about the deal.
“Because he was tweeting on behalf of himself, the policy doesn’t apply,” Denholm said, referring to a Tesla policy requiring disclosures by insiders to be vetted by the company ahead of time.
Musk told the jury earlier this week he could have financed the potential deal from existing Tesla investors as well as a Saudi wealth fund.
“Funding was absolutely not an issue,” Musk told the jury. “It was quite the opposite.”
Musk conceded, however, that he did not have binding agreements with investors for set amount, leaving it to the jury to determine whether he deceived investors.
Egon Durban, the co-chief executive officer of private equity firm Silver Lake, testified earlier on Friday that he had discussed to Musk about his plan to take the company private, but that it wasn’t clear if the deal could go through. Even though investors were interested, he said, there was no written commitment from them.
On Friday, Goldman Sachs banker Dan Dees (GS.N) also gave testimony. He was surprised by the “funding secured” tweet because Goldman, which had previously worked with Tesla, was not a participant to the transaction/Deal.
Whether Musk artificially raised the company’s share price by praising the buyout’s prospects, and if so, how much, will be decided by a nine-person jury.
Musk said in his testimony that the deal to buy out the company never happened because investors, especially retail shareholders, wanted to keep the company public.The trial is scheduled to resume on Tuesday.
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