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Filed a lawsuit against Elon Musk and Tesla Board in a lawsuit alleging that “ erratic ” tweets violate a fiduciary duty – TechCrunch

Filed a lawsuit against Elon Musk and Tesla Board in a lawsuit alleging that `` erratic '' tweets violate a fiduciary duty - TechCrunch

Tesla CEO Elon Musk’s tweets are the subject of another lawsuit.

A Tesla investor is suing the company’s board of directors and Musk for continuing to send “erratic tweets” that violate a settlement with the US Securities and Exchange Commission requiring oversight of his activities on social media. Suit that was It was first reported by Bloomberg, Claims that Musk exposes the company to possible fines and penalties from the regulators and could lower its share price. The lawsuit names the board of directors for failing to control Musk’s behavior, which puts the company at risk.

The lawsuit filed by investor Chase Gritti that was Filed in Delaware Chancery CourtAnd the It was opened on Friday. It was originally introduced on March 8. Tesla did not respond to a request for comment.

Tesla, Musk, and the Securities and Exchange Commission reached an agreement in April 2019 granting the CEO the freedom to use Twitter – within certain restrictions – without fear of being scorned for violating a previous court order. The agreement allows Mask to Tweet as he pleases except when it comes to specific financial events or milestones. In these cases, Musk must seek the prior approval of a securities attorney, in accordance with the agreement submitted to Manhattan Federal Court.

The April 2019 agreement was the product of a years-to-year battle between Musk and the Securities and Exchange Commission, which began after a notorious tweet on August 7, 2018, in which it was stated that the company had obtained “guaranteed funding” for the private takeover at $ 420 a share. The The Saudi Electricity Company lodged a complaint Claiming that Musk committed securities fraud.

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Musk and Tesla settled with the Securities and Exchange Commission without admitting any wrongdoing. Tesla agreed to pay a fine of $ 20 million; Musk had to agree to step down As President of Tesla for at least three years; The company had to appoint independent directors to the board of directors; Tesla was also asked to put in place a way to monitor Musk’s public statements about the company, including via Twitter.

After that, the battle raged again Musk sent out a tweet On February 19, 2019, Tesla will produce “about” 500,000 cars that year, to correct itself hours later to make clear that it was intended that the company would produce an annual rate of 500,000 cars by the end of the year.

This latest lawsuit alleges that Musk’s tweet violates the April 2019 ruling and breaches his duty and the duties of the board of directors. The 105-page lawsuit cites numerous tweets sent from Musk’s account, including Tweet May 1, 2020 – More than a year after the issuance of the Securities and Exchange Commission (SEC) ruling – which stated: “Tesla’s stock is very high in the IMO”

tweet I sent An arrow in free fallAlmost 12% in half an hour after he tweets on stock prices. The tweet was one of many tweets sent quickly that day, covering a variety of topics and demands to “return people their freedom” and lines from the US national anthem to quotes from poet Dylan Thomas and a claim that he would sell all of his possessions. Musk later told the Wall Street Journal in an email that he was not joking and that his tweets had not been pre-screened.

The lawsuit revealed on Friday alleging that R.Tesla’s board has also failed to get a general counsel who “can give untainted advice by Musk,” the lawsuit. Three general counselors left the company in 2019, which the lawsuit points to as evidence that none of them has been able to exercise independent advice that differs from Musk’s “desired outcome.”

The lawsuit alleges that Musk’s “erratic” actions caused “significant damage” to the company, including the loss of billions of dollars in its market capital.

The issue is Gharrity v. Musk, Del. Ch., No. 2021-0199.

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