Trial Against Elon Musk For Financial Fraud Claims Begins With Jury Selection

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Jury selection in a trial over a lawsuit against Elon Musk started Tuesday in a federal court in the San Francisco area. The underlying case challenges Musk and members of the board of directors at Tesla, where he is CEO, over social media posts Musk made in 2018 alleging he secured the funding to take the company private at a whopping $420 a share.

Musk has asserted he wasn’t lying, pointing to alleged prospects of financial support from a Saudi investment fund led by that country’s Crown Prince Mohammed bin Salman. Nonetheless, he and Tesla have paid individual fines of $20 million each to federal authorities, and the court in this lawsuit has outlined instructions that members of the jury treat his key statements as factually untrue. (The Securities and Exchange Commission previously stated the tens of millions in financial penalties would “be distributed to harmed investors under a court-approved process” per the terms of a settlement.)

Musk also left a role as chairman of Tesla’s board. The social media posts could have constituted an artificial method to affect the company’s stock price, which subsequently went up — and then down evidently amid revelations of the federal scrutiny that culminated in large fines. Short sellers, who stood to benefit from declines in price, ended up buying up Tesla holdings at inflated prices, costing them big — meaning hundreds of millions of dollars. In recent years, the share price for Tesla has seen further chaos, although it’s rallied over the last week or so.

Musk sought prior to trial to move this case, with his legal team suggesting Texas, but the federal judge rejected that idea. Among the points of contention was whether a sufficiently unbiased jury could be assembled among local residents, especially considering the chaos of — and outrage over — Musk’s handling of Twitter, where he’s presided over expansive layoffs. He also continues drawing scrutiny for his evident affinity for far-right ideology, which is easily discernible through his consistently active personal feed on that site. According to The Washington Post, expectations are that the trial on shareholders’ fraud allegations will stretch across roughly three weeks. Alex Spiro, an attorney for Musk, pushed that plaintiffs not mention recent news out of Twitter in their opening statements, to which they evidently agreed. The case, should jurors rule in plaintiffs’ favor, could likely end with significant financial penalties for Musk — although his expansive holdings make it not a sure thing how large that dent would be, proportionally speaking.