Musk 'lied' about funding to take Tesla private, investors' lawyer says

A lawyer for Tesla Inc investors said on Wednesday that CEO Elon Musk "lied" when he tweeted in 2018 that funding was "secured" to take the company private.

Musk's alleged lies caused "regular people" to lose millions, Nicholas Porritt, lead attorney for the investors, told a jury in San Francisco during opening statements.

"Millions of dollars were lost when his lies were exposed," he added.

The case is a rare securities class action trial, and Musk and his company are bucking the norm of settling claims that clear high legal hurdles, making for a potentially dramatic trial at which Musk himself is expected to take the stand this week.

Tesla investor Glen Littleton is seeking damages on behalf of shareholders who traded the company's stock in the days after Musk posted his plan to take the company private on Twitter in August 2018. A jury of nine will decide whether the tweets artificially inflated Tesla's share price by playing up the status of funding for the deal, and if so, by how much.

The defendants, who also include current and former Tesla directors, have said they will argue that the stock price jumped in response to Musk saying he was considering taking the company private, which they say was the case, not his assertion about funding.

US District Judge Edward Chen, who is overseeing the trial, has ruled that Musk's statements about the status of the deal were false and Musk made them recklessly. The deal did not happen.

While shareholders sue hundreds of companies and their executives for alleged securities fraud every year, very few of those cases make it to trial. The vast majority are either dismissed by courts or settle.

Not among the jurors selected on Tuesday were some critics of Musk, such as one potential juror who said the chief executive, who has gained a reputation for the unpredictable, was "a little off his rocker."

After opening statements, shareholders will be able to start calling witnesses to the stand. Twitter Inc has about 2,300 active employees, Elon Musk said in a Tweet on Saturday.

CNBC on Friday reported that Twitter's full-time headcount has reduced to about 1,300 active, working employees, including fewer than 550 full-time engineers by title.

About 75 of the company's 1,300 employees are on leave including about 40 engineers, CNBC said, citing internal records.

"The note is incorrect. There are about 2300 active, working employees at Twitter," billionaire Musk tweeted in a response to a tweet quoting CNBC.

"There are still hundreds of employees working on trust & safety, along with several thousand contractors," Musk added.

Musk took over Twitter in October and swiftly moved through a number of product and organizational changes. The company rolled out Twitter-verified Blue check-mark as a paid service and also laid off about 50% staff.

Elon Musk, the CEO of Twitter and Tesla, testified Friday in a court in the US state of California that one of his tweets did not affect the stock price of his electric car company, according to reports.

"Just because I tweet something, doesn't mean people believe it or act accordingly," Musk said in his defense. "The causal relationship is clearly not there simply because of a tweet."

After nearly 30 minutes of testimony from Musk, the San Francisco court adjourned until Monday.

"Am considering taking Tesla private at $420. Funding secured," Musk tweeted in 2018.