Next week on Monday, a monumental trial is set to take place in court as Tesla CEO, Elon Musk is put under the microscope. This trial comes in light of the accusations put towards Musk by Tesla’s shareholders about the 2016 bailout of SolarCity. Musk will reportedly be the first witness in the trial to defend his role in the rescue of SolarCity by way of Tesla’s acquisition of the company. The acquisition took place for a valuation of $2.6 billion. The shareholders have sued the tech mogul and the members of the Tesla board for the same, as per a report by Reuters. The shareholders allege that Musk and his family were beneficiaries of this deal and are amongst the largest shareholders in the company.
The shareholders have also alleged that Musk and the members of the board failed to disclose the pertinent details of the deal and they breached their fiduciary responsibilities, the report adds. The union pension funds and assets managers who are heading the case are seeking a payout from Musk to Tesla. They also want him to give a payout for the profits from his SolarCity stock according to the Reuters report. In the event that Musk is pinned to the wall in court on Monday, this would be the largest financial judgements against an individual.
Interestingly, last year in 2020, the same board members who are currently named in the ongoing trial process were caught in a tangle with the Tesla shareholders. Only in the previous case, the shareholders received a settlement payout of $60 million from the board members, without any admission of guilt. Of those caught in the fire, Musk was the only one who chose to take the matter to court.
Coming back to the present issue at hand, the plaintiffs in the case accused Musk of driving the negotiations and pushing the board members to raise the price for the acquisition of SolarCity, of which he is a 22 per cent stakeholder, the report mentioned. This rise in prices would only have benefited Musk as his stocks appreciated in the wake of the deal and add to his already immense wealth.
There will be no jury overseeing the verdict in this case. Instead, Delaware Chancery Court’s judge, Vice-Chancellor Joseph Slights III will be the oversight and final voice on the matter as per the Reuters report. It is Musk’s point of view that the acquisition of the SolarCity company was but the natural progression for Tesla in the pursuit of its environmentally friendly mission and approach.
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