Elon Musk could end up paying $9bn in penalty on SolarCity – The National

Tesla investors who are suing Elon Musk over the companys SolarCity acquisition say the judge can require him to pay $9.4 billion if he rules that Mr Musk did not properly remove himself from the deal.

Given [Mr] Musks disloyalty, the court has wide discretion in awarding damages, lawyers for pension funds suing over the deal said in a Delaware court filing.

The court could require [Mr] Musk to return some or all of the enormous gain he has realised as a result of receiving excessive Tesla shares, the funds said.

Delaware Chancery Court Judge Joseph Slights III is weighing whether Mr Musk the solar power providers chairman and largest shareholder at the time of the buyout improperly stood on both sides of the $2.6bn deal and wrongfully used his influence with the Tesla board to get the transaction done.

The suggestion that Mr Musk might face a $9.4bn penalty was made as part of post-trial arguments that the judge requested after presiding over a trial that included two days of testimony from Mr Musk in July.

The court has scheduled another around of oral arguments for January, suggesting a ruling in the case is months away.

Mr Musks lawyers said the SolarCity acquisition was a product of fair dealing that was approved by 85 per cent of Teslas shareholders.

The evidence shows that [Mr] Musk did not and could not control the acquisition, the board, or Tesla stockholders, their post-trial brief said.

The investor filing notes that Mr Musk received 2.4 million Tesla shares in exchange for his holdings in SolarCity, an amount that has increased to 12 million because of stock splits.

Barring a return of those shares, the investors calculate that the court could award damages of between $1.4bn and $2.4bn, to account for what they contend is SolarCitys lower value.

Mr Musk is the last Tesla director left in the case after his colleagues agreed to a $60 million settlement of investors claims last year.

If the judge rules against him, Mr Musk will have to pay the damages out of his own pocket. Any recovery from Mr Musk the worlds richest person, according to the Bloomberg Billionaires Index would go into Teslas coffers, not to the funds.

Mr Slights has already said that Mr Musk, despite holding only a 17 per cent stake in Tesla, used his visionary persona and ties to other Tesla directors to smooth the deals path.

One key question the judge must answer is whether, as Teslas largest shareholder, Mr Musk so dominated the board that final approval was a foregone conclusion.

Updated: October 5th 2021, 3:30 AM

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Elon Musk could end up paying $9bn in penalty on SolarCity - The National