Musk expected to take stand as trial resumes over Tesla tweet

By Jody Godoy

SAN FRANCISCO Jan 20 (Reuters) – Elon Musk, Tesla Inc’s
chief executive, is likely to be called to testify on
Friday in a jury trial over his 2018 tweet that he had “funding
secured” to take the electric carmaker private, which
shareholders allege cost them millions in trading losses.

The class action trial in San Francisco federal court
resumed with the plaintiffs calling Timothy Fries to testify
about his reasons for investing in Tesla stock and the losses he
suffered, allegedly due to Musk’s tweet.

Musk is listed as the third possible witness on Friday,
following Guhan Subramanian, a Harvard Law School professor who
is expected to tell the jury how Musk’s conduct in 2018 deviated
from a typical management buyout, according to court documents.

Musk, known for combative testimony, is expected to address
why he has insisted he had Saudi investor backing for the deal,
which never came together, and whether he knowingly made a
materially misleading statement with his tweet.

The case is a rare securities class action trial and the
plaintiffs have already cleared high legal hurdles, with U.S.
Judge Edward Chen ruling last year Musk’s tweet was untruthful
and reckless.

Shareholder attorney Nicholas Porritt told the jury in his
opening statements on Wednesday that Musk lied when he sent the
tweet, costing investors like Glen Littleton, the lead
plaintiff.

Musk’s attorney, Alex Spiro, countered in his opening
statement that Musk believed he had financing from Saudi backers
and was taking steps to make the deal happen. Fearing leaks to
the media, Musk tried to protect the “everyday shareholder” by
sending the tweet, which contained “technical inaccuracies,”
Spiro said.

There were no proceedings on Thursday.

A jury of nine will decide whether the tweet artificially
inflated Tesla’s share price by playing up the status of funding
for the deal, and if so, by how much.

The defendants include current and former Tesla directors,
whom Spiro said had “pure” motives in their response to Musk’s
plan.

(Reporting by Tom Hals in Wilmington, Del., and Jody Godoy in
San Francisco
Editing by Noeleen Walder, Peter Henderson and Matthew Lewis)