November 16, 2021

Tesla Sued For $ 162 Million By JPMorgan

 Reflecting on Elon Musk this time.


Tesla was sued Monday by JPMorgan for $ 162.2 million over allegations that the Elon Musk company ‘blatantly’ violated an agreement involving share warrants after its share price soared.


According to a statement filed in Manhattan federal court, Tesla had sold warrants in 2014 to JPMorgan that would have benefited if their ‘strike price’ had been below Tesla’s share price after the warrants expired in June and July 2021.


JPMorgan, which has the power to change the strike price, said it had reduced it after seeing Musk's tweet on Twitter dated Aug. 7, 2018, in which he would take a private stake of $ 420 per share with guaranteed financing. They also reversed part of its reduction when Musk abandoned the idea 17 days later.


However, Tesla's shares increased 10 -fold by the time the warrants expired and according to the contract, Tesla had to pay for the shares in cash or units of shares if it wanted to avoid being subject to ‘default’ status.



So far, Tesla has not given any further information on the matter.


Following the previous story, Tesla had sold the warrants to reduce the potential for stock dilution from the sale of separate convertible bonds, in addition to the goal of lowering the federal income tax rate.


JPMorgan said they were entitled to a contract agreement to enact the terms of the warrant following a ‘significant corporate transaction involving Tesla’.


But Musk has released a tweet on Twitter saying the drafting the bank made was to take advantage of Tesla’s stock movement.


As a result, Musk and Tesla were prosecuted by the U.S. Civil Securities and Exchange Commission and fined $ 20 million.