JPMorgan on Friday filed a lawsuit against Tesla over Elon Musk’s August tweet in which he said he had secured funding to take the company private.
As part of the complaint, which was filed in a Los Angeles County court, JPMorgan requested that California Superior Court Judge William Pounders declare that Tesla has no authority to “conceal its obligations and liabilities” from JPMorgan and hold onto its money.
At the center of the dispute is the arcane process in which any deposit to cover the buyout is “cleared” to its owner and then sent on to the seller. Tesla has since decided to let shareholders hold onto the funds.
The suit comes after Musk ran into problems with a London judge who halted a tweet he posted earlier this week announcing that he was “considering taking Tesla private at $420.” Musk later withdrew the Tweet. The Canadian regulator that could take legal action against Musk — the Ontario Securities Commission — responded Friday, saying that its intent to pursue criminal charges remains unchanged.
Following those events, Musk on Wednesday released a revised statement containing a total payout of $420. Tesla said in a Friday filing with the Securities and Exchange Commission that it received $180 million through the commitment for funding “and Tesla has the option to close on the remaining $50 million.”
On Friday, the bank was put in charge of two hedge funds – Omega Advisors and Farallon Capital Management — that had already committed to the deal.
Musk initially Tweeted Aug. 7 about taking Tesla private at $420 a share. He soon followed with a longer Tweet asking for support with the “funding secured.” That Tweet and a follow-up, saying that financing had been secured but that the board had not yet approved it, sent the share price of Tesla to an all-time high and stoked a frenzy of interest on Wall Street.
Then, on Aug. 9, the day after a Tesla board-led committee was formed to assess a potential buyout offer, Musk tweeted the revised price — and the requirement that shareholders must vote on a deal.
Musk has apologized for the errors in his initial Tweet, but the Bankruptcy and Insolvency Law Committee of the California State Bar is taking legal action against Musk.
In a statement released Friday, the committee said, “The process of public disclosure under California law should never be a frenzied affair for the benefit of those who are making stock market announcements.”
A spokeswoman for Tesla declined to comment on the filing by JPMorgan.