JPMorgan sues Tesla over warrants, Elon Musk's 2018 tweets

Tesla abandoned the going-private deal on Aug 24, 2018 and JPMorgan again adjusted the strike price to reflect the increase in the share price
JPMorgan Chase & Co. sued Tesla Inc. seeking a $162 million payment for warrants that expired above their strike price, which had been muddied by Elon Musk’s tweet in 2018 threatening to take the company private.

JPMorgan claims the Aug. 7, 2018 tweet amounted to a significant corporate transaction that allowed it to adjust the strike price, and the bank reduced it to maintain the same fair market value as before the announcement. Tesla abandoned the going-private deal on Aug. 24 of that year, and JPMorgan again adjusted the strike price to reflect the increase in the share price.

“Even though JPMorgan’s adjustments were appropriate and contractually required, Tesla has refused to settle at the contractual strike price and pay in full what it owes to JPMorgan,” the bank said in a complaint filed Monday in Manhattan federal court. “Tesla is in flagrant breach of its contractual obligations. As a result, more than $162 million is immediately due and payable to JPMorgan by Tesla.”

Tesla wrote JPMorgan on Feb. 13, 2019, complaining the adjustments made were “unreasonably swift and represented an opportunistic attempt to take advantage of changes in volatility in Tesla’s stock,” the bank said in the breach of contract complaint.

Tesla didn’t respond to a request for comment on the lawsuit.

JPMorgan said as part of a series of warrant transactions in 2014, Tesla agreed to pay the bank in stock or cash if, when the warrants expired in June and July, Tesla’s share price was above the contracted price. 

If Tesla’s stock price on the expiration date was less than the strike price, JPMorgan wouldn’t get anything. 

The shares were “well above” the original and adjusted strike prices upon their expiration, the bank said.

The case is JPMorgan Chase Bank v. Tesla, 21-cv-09441, US District Court, Southern District of New York (Manhattan).

Big Short’s Burry deletes Twitter account after spat 

Michael Burry has deleted his Twitter account once again, shortly after “The Big Short” investor disclosed he ditched some of his biggest bearish bets. A search for Burry’s account, @michaeljburry, on the website showed the account no longer exists. 

Burry has repeatedly deleted and reactivated his account in recent months.

Scion Asset Management, which Burry founded and runs as chief executive officer, closed a number of trades in the third quarter of this year. 

Musk exercises options, sells shares worth $930 million

Elon Musk exercised options and offloaded more Tesla shares, continuing a streak of sales that helped tank the stock last week by the most since March 2020.
The world’s richest person disposed of more than 934,000 shares on Monday for about $930 million, according to regulatory filings. That adds to the $6.9 bn he already sold last week, just after he took an unusual Twitter poll asking whether he should dispose of 10 per cent of his Tesla stake. Part of Monday’s sales were to help pay taxes on the exercise of 2.1 million options.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel