JPMorgan Chase filed a lawsuit against Tesla on Monday, accusing the electric car firm of “violating contract action” on stock warrants following CEO Elon Musk’s 2018 tweet that he might take his firm private.
why it matters: JPMorgan alleged that the bank and Tesla “entered into a series of warrant transactions that required Tesla to pay shares of its shares or cash to JPMorgan” if the car company’s stock price was contractual when the warrant expired. Above the “strike price”.
- Musk tweeted that the warrant “was significantly reduced” after Tesla had “funding secured” to take Tesla private for $420.
- JPMorgan alleges that June and July of this year ended with “Tesla’s share price above that strike price”.
of note: “JP Morgan solicited outstanding shares or cash, but Tesla ignored its express contractual obligation to pay JPMorgan in full,” the bank said in the lawsuit filed in US District Court in Manhattan.
- “JP Morgan takes this action to enforce its right to pay.”
- JPMorgan said in the lawsuit that it seeks to “immediately recover more than $162 million due and payable.”
What are they saying: JPMorgan spokeswoman Tasha Pelio said in an emailed statement that the bank “has given Tesla multiple opportunities to meet its contractual obligations, so it is unfortunate that they have forced this issue into litigation.”
- Tesla representatives did not immediately respond to Nerdshala’ request for comment.
Read full case via document cloud,
Editor’s note: This article has been updated with commentary from Paleo.