Elon Musk is slated to the take the stand on Monday to defend Tesla’s 2016 purchase of SolarCity, as a shareholder lawsuit alleges the billionaire CEO pressured the EV company’s directors into purchasing the failing solar firm.
As reported by Reuters, Musk is expected to testify in a Delaware Court of Chancery as early as Monday, as seven shareholder lawsuits— which are combined into one— accuse Tesla directors of breaching their fiduciary duties, after they agreed to purchase SolarCity. The solar company, which installs rooftop solar panels and at the time was rife with financial difficulties, was bought out by Tesla; however, the shareholders’ lawsuit says that the purchase was a conflict of interest, given that SolarCity was founded by Musk, along with two of his cousins.
In August of 2020, a settlement to the tune of $60 million was granted by a judge in order to conclude the shareholders’ claims against Tesla’s board of directors, but given that Musk did not admit any fault and refused to settle, he is now the sole remaining defendant. Although Musk’s trial was initially scheduled for March of last year, it ended up getting adjourned due to the pandemic crisis.
Investors, along with pension funds that are leading the suit, accuse Musk of pressuring Tesla’s directors into approving the SolarCity purchase, as well as persuade remaining shareholders to vote in majority for the acquisition. Musk, who at the time was the chair and majority shareholder of both companies, shocked Wall Street when he revealed that his electric vehicle company would buy SolarCity for more than $2 billion.
Information for this briefing was found via Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.