According to court filings out in the Southern District of New York Monday JPMorgan Chase & Co sued electric vehicle maker Tesla Inc for $162.2 million, plus interest, attorneys’ fees, and expenses, accusing Elon Musk’s electric car company of “flagrantly” breaching a contract related to stock warrants after its share price soared.
Shortly after the suit was filed on Monday, Musk was still actively tweeting in a thread he started Sunday in response to a Senator Bernie Sanders (I-VT) tweet about taxes. “I like to dig my grave real deep,” Musk wrote.
Tesla was supposed to deliver shares, or cash, if its share price went above a contractually set “strike price” by a certain expiration date, the complaint says. But a dispute arose when JP Morgan made adjustments to the value of the warrants when Tesla CEO Elon Musk tweeted in August 2018 that he was considering taking the company private for $420 a share, and again when he rescinded the idea of privatizing Tesla a few weeks later.
JP Morgan claims it had a contractual right to make those adjustments, while Tesla said in a letter that they were “unreasonably swift and represented an opportunistic attempt to take advantage of changes in volatility in Tesla’s stock,” according to the filing.
In the 16 months that followed, Tesla stock bottomed out at a three-year low of just under $177 per share in June 2019, before shooting past $420 per share in December that year. Musk was later charged with securities fraud by the SEC. Tesla and Musk agreed to pay $20 million each to settle the suit.
Tesla shares closed on November 15 at $1,013.39.
The complaint says, “In total, Tesla failed to deliver 228,775 shares of its common stock, leaving JPMorgan with an open hedge position equal to that shortfall.”
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