Tesla fights back against JPMorgan over Musk tweet
Tesla submitted a filing in Manhattan federal court on Monday, accusing JPMorgan of “bad faith and avarice” for demanding $162.2 million after the bank had unilaterally changed the terms of warrants it received when the electric carmaker sold convertible bonds back in 2014.
Warrants allow holders to purchase company stock at a set “strike” price and date.
“JPMorgan pressed its exorbitant demand as an act of retaliation against Tesla both for it having passed over JPMorgan in major business deals and out of senior JPMorgan executives’ animus toward Mr. Musk,” Tesla said, adding that by changing the terms the banking multinational “dealt itself a pure windfall” after receiving a “multibillion-dollar payout” from Tesla’s soaring share price.
Tesla’s countersuit escalates the conflict between the US’ biggest investment bank and the world’s most valuable automaker, which have hardly done any business with each other since the disputed contract.
The legal battle began last November, when JPMorgan took Tesla to court for “flagrantly” violating a stock warrants contract. The bank alleged that the car manufacturer sold warrants to JPMorgan in 2014, which were to be paid off if their strike price, or guaranteed fixed price, was below Tesla’s share price upon the warrants’ expiration in June and July 2021.
JPMorgan claimed that the tweet shared by Tesla’s eccentric CEO Elon Musk on August 7, 2018 made the automaker’s share price more volatile. Musk tweeted that he might take Tesla private and had “funding secured,” but backtracked his comments 17 days later. Tesla’s share price had risen nearly ten-fold by the warrants’ expiration date.
Musk’s tweets led to a civil lawsuit by the US Securities and Exchange Commission. The litigation resulted in Musk giving up Tesla’s chairmanship, and he and the company each being fined $20 million.
For more stories on economy & finance visit RT's business section
