Having lost more money than any human in history over the course of the last year, Elon Musk may well be hoping for a clean slate in 2023.
The tech billionaire had a chaotic 2022 after securing a deal to buy Twitter for $44 billion last April. After flip-flopping over whether or not he would follow through with his takeover of the social networking site - with Twitter threatening him with legal action if he chose to back out - Mr Musk eventually went ahead with the buyout and became the platform’s interim CEO.
His takeover was controversial given his attitudes to working culture and free speech. Since buying the platform he has allowed previously banned figures, like former US President Donald Trump, to return and has also banned prominent journalists and accounts that have portrayed him in a negative light. Millions of Twitter users voted for him to step aside as CEO in a poll he conducted in December 2022.
But the problems in Mr Musk’s in-tray are not solely confined to Twitter. He currently faces a lawsuit from Tesla shareholders as a result of a series of tweets he published in 2018. His substantial fortune is closely linked to the electric car giant.
So why is he facing legal action - and why is he trying to move the location of the trial? Here’s what you need to know.
Why is Elon Musk being sued?
Elon Musk faces a shareholder lawsuit because of a series of tweets he published on 7 August 2018.
In one tweet, the Tesla CEO wrote: “Am considering taking Tesla private at $420. Funding secured.” In two others, he said that shareholders could either sell their shares at the price or retain them and go private, and that he would form a “special purpose fund” that would allow shareholders to stay with Tesla.
The tweets pushed the car manufacturer’s stock price up 13% against the previous day’s closing price. They then proceeded to perform in a volatile way, before winding up 11% down 10 days later. Mr Musk announced Tesla would stay public on 24 August.
Soon after Mr Musk’s tweets went out, he agreed to pay a $20 million civil fine to settle fraud charges brought against him by the US Securities and Exchange Commission - a governmental agency which regulates the markets in the USA. Tesla reached a separate $20 million settlement with the regulator.
While Elon Musk said in a court filing last year that the tweet’s assertion that he had secured funding for a $72 billion buyout was “entirely truthful” - he claims to have received backing from Saudi Arabia’s sovereign wealth fund - investors are seeking damages for losses from him and the Tesla board because they believe the tweet was false and that Mr Musk sent it with wrongful intent.
There has been speculation that the wrongful intent was to squeeze Tesla short-sellers - investors who bet the company’s share price would fall so that they would make money. In Spring 2022, a judge ruled that Musk’s tweets were false and reckless, which opened the door to a jury trial.
The resulting case - which is due to begin on 17 January 2023 - will deliberate over whether the tweets mattered to shareholders, if and how they affected Tesla share prices, and whether the company or its directors should be held liable for damages.
Why is Elon Musk trying to move lawsuit location?
The Tesla shareholder trial has been scheduled to take place in San Francisco. However, Elon Musk and his lawyers want it to be moved to Texas.
Back in 2018, Elon Musk was resident in California, while Tesla was based in Palo Alto, Texas. Mr Musk then moved to Texas in 2020 and Tesla moved its headquarters to the state capital Austin in 2021.
According to court filings, the tech billionaire’s representatives believe he would not get a fair trial in San Francisco because of “biased and negative stories about Mr Musk” in the local press, and negative comments from local politicians, including the mayor of San Francisco.
They say the bad press particularly revolves around what has taken place at Twitter, which is based in San Francisco. The filings say around 1,000 people in the area have been laid off from Twitter since Mr Musk’s takeover.
“A substantial portion of the jury pool … is likely to hold a personal and material bias against Mr Musk as a result of recent layoffs at one of his companies as individual prospective jurors – or their friends and relatives – may have been personally impacted,” the filing reads.
However, lawyers for the shareholders who have brought the lawsuit against Mr Musk have criticised the last-minute nature of the request, and have argued that: “Musk’s concerns are unfounded and his motion is meritless.”
They added: “The northern district of California is the proper venue for this lawsuit and where it has been actively litigated for over four years.” If Mr Musk’s lawyers fail to move the trial elsewhere, they will call for it to be postponed until negative coverage of the tech billionaire’s Twitter buyout dies down.