Elon Musk Goes to Trial over His 2018 Plan to Take Tesla Private

nytimes.com

13 points·bdcravens··3 comments

> The plaintiffs...assert that Mr. Musk’s actions were responsible for the losses they suffered on Tesla’s stock movements.

So what law are they actually asserting that Musk broke? That a CEO is incentivized to act in the interest of the company's shareholders? Honest question, what specific laws come into play here - is it about stock manipulation?

Also, can what happened be legally considered as a "loss" if an investor never cashed out? AFAIK, that would make it an unrealized loss, analogous to unrealized gains which typically don't officially result in any net change until the asset is sold.

when you are the CEO or anyone considered to have "material non public information" there are a lot of SEC restrictions on what you are allowed to reveal publicly about your company.

Securities and Exchange Act of 1934, Section 10b-5 [1]. You'll commonly see this shortened to just "10b-5" in common parlance.

There's quite a large industry [2] involving lawsuits anytime someone can credibly claim that an executive knew or (the real kicker) should have known they were making a false statement.

The vast majority of cases settle - there's rigorous and standardized models for computing how much to settle for. The special thing in this case is how it's actually gone to trial.

[1] https://www.investopedia.com/terms/r/rule10b5.asp

[2] https://securities.stanford.edu/

Edit: The specific case here is https://securities.stanford.edu/filings-case.html?id=106701 (Docket 18-CV-04865)

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