On Monday next week, there is going to be a monumental trial in court because Tesla CEO, Elon Musk placed under the microscope. The test comes in light of allegations made against Musk by Tesla shareholders about the 2016 bailout of SolarCity. Musk will reportedly be the first witness in the trial to defend his role in defending SolarCity through the company’s acquisition of Tesla. The acquisition took place for a valuation of $2.6 billion. According to a Reuters report, shareholders have sued the tech mogul and Tesla board members. Shareholders allege that Musk and his family were beneficiaries of the deal and are among the company’s largest shareholders.
Shareholders also alleged that Musk and board members failed to disclose relevant details of the deal and violated their fiduciary responsibilities, the report said. The union pension fund and asset manager leading the case are demanding Musk pay Tesla. They also want him to pay for profits from his SolarCity stock, as reported by Reuters. In the event that Musk is walled off in court on Monday, it would be the biggest financial judgment against an individual.
Interestingly, last year in 2020, the same board members who have been named in the ongoing testing process were at loggerheads with Tesla shareholders. Only in the last case, shareholders received settlement payments of $60 million from board members, without pleading guilty. Musk was the only one among those caught in the fire who decided to take the matter to court.
Coming back to the current issue, the plaintiffs in the case accused Musk of driving negotiations and prompting board members to raise the price for the acquisition of SolarCity, of which he owns 22 percent, the report noted. Musk will only benefit from this increase in prices as his shares appreciated in the wake of the deal and added to his already immense wealth.
There will be no jury overseeing the verdict in this case. Instead, the Delaware Chancery Court judge, Vice-Chancellor Joseph Slights III, will be the oversight and final voice of the case, reports Reuters. It is Musk’s view that the acquisition of the SolarCity company was a natural progression for Tesla in the pursuit of its environmentally friendly mission and vision.
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