JPMorgan is suing Tesla for $ 162 million in litigation over Musk’s tweets

  • JPMorgan had Tesla warrants that would pay off if their strike price was below the electricity producer’s share price at expiration.
  • The bank adjusted the strike price after Tesla CEO Elon Musk tweeted that he was considering taking the company private in 2018.
  • JPMorgan said it had contractual rights to make the adjustments. Tesla said they were opportunistic.

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JPMorgan Chase has sued Tesla for $ 162 million, alleging that the electric car maker “obviously” breached a contract related to stock warrants.

According to the application on November 15, Tesla sold warrants to JPMorgan, which would pay off if their strike price was below the electricity producer’s share price at the expiration of the warrants.

JPMorgan adjusted the strike price accordingly CEO Elon Musk tweeted in August 2018 that he could take Tesla privately to $ 420 per share and had “financed secured.” JPMorgan said in the application that it made the adjustment when Musk’s tweet caused “immediate and significant economic effects as the market tried to price the likelihood of Tesla becoming private.”

JPMorgan adjusted the strike price again when Tesla abandoned the plan to take the company private. It had contractual rights to make the adjustments, the bank said in the filing.

The warrants had expiration dates from June 1, 2021 to July 27, 2021. By the time the warrants expired, Tesla’s share price had risen to levels “well above both the initial and adjusted strike prices”, requiring Tesla to contractually supply shares of its equities. stock or cash, JPMorgan said in the archive.

“Although JPMorgan’s adjustments were appropriate and contractually required, Tesla has refused to settle the contractual strike price and pay in full what it owes to JPMorgan. Tesla is in clear breach of its contractual obligations,” the bank said in the filing.

Tesla said in February 2019 that JPMorgan’s adjustments were “unreasonably rapid and an opportunistic attempt to take advantage of changes in


volatility

at Tesla’s warehouse, “according to the archive.

Following Musk’s 2018 tweet, the US Securities and Exchange Commission (SEC) accused Musk of securities fraud. Tesla and Musk agreed to pay $ 20 million each to settle the lawsuit.

Tesla did not immediately respond to Insider’s request for comment on the latest lawsuit.

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