Summary
- Tesla CEO Elon Musk is expected to go to trial, set to take place on Monday to defend his role in Tesla’s US$2.6 billion SolarCity acquisition back in 2016.
- The massive trial comes into the picture after the allegations against Elon Musk around the 2016 bailout of SolarCity by Tesla shareholders.
- If the case goes in favour of shareholders, Tesla CEO may have to pay ~US$2 billion from his substantial personal wealth.
Tesla, Inc. (NASDAQ:TSLA) CEO Elon Musk is expected in court on Monday, 12 July, for defending his role in the Company’s US$2.6 billion acquisition of SolarCity in 2016. If Musk loses the case, he might have to pay US$2+ billion from his wealth.
On 12 July 2021, a monumental trial is set to take place in court as the Palo Alto-based EV manufacturer’s CEO is put under the microscope. This trial follows the allegations against Musk by the shareholders of Tesla about the bailout of SolarCity. According to the media reports, Musk would be the first witness in a trial to defend his stance.
Musk in a spot of bother as he is set to appear in court on 12 July (Source: © Joeduffy1 | Megapixl.com)
Shareholders sued Musk for valuation of SolarCity acquisition
Shareholders have taken legal action against Musk and Tesla board members, alleging that the 2016 deal amounted to a bailout of SolarCity.
Apparently, Musk will be the first witness in the trial to defend his role for rescuing SolarCity by way of Tesla’s acquisition of the Company. The acquisition took place for a valuation of US$2.6 billion.
- The shareholders allege that the tech czar and his family were beneficiaries of this acquisition and are among the Company's largest shareholders.
- Also, the shareholders allege that it unfairly enriched the Musk household, who have been among the many largest shareholders.
- They additionally claim that Musk and others failed to disclose all pertinent particulars and breached their fiduciary tasks.
DO READ: What is wrong with Tesla? Is Elon Musk doing something to fix the problem?
However, Tesla CEO has insisted that he was fully recused from the negotiations over the acquisition.
There will be no jury overseeing the verdict in this case, and as per Reuters, Vice-Chancellor Joseph Slights III, Delaware Chancery Court’s judge, will be the supervise and final voice on the matter.
According to Elon Musk, the acquisition of SolarCity was in line with the natural progression in the quest for its environmentally friendly Tesla approach.
Musk’s lawsuits beyond SolarCity
Tesla and Musk face many other legal problems, including one over Musk’s unprecedented CEO compensation package and several federal probes as per the Company’s own financial filings.
Source: © Nito100 | Megapixl.com
In a separate case, the Securities and Exchange Commission sued Musk in 2018 for fraud, and Musk and Tesla settled the case by paying US$20 million each. As one of the settlement terms, Elon Musk had to relinquish his chairman position at Tesla temporarily.
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