By Seth Gellman
On Monday, November 15, JPMorgan Chase sued Tesla for $162 million, accusing the electric car company of breaching a contract regarding payments to the banking giant.
Musk’s tweets in August, 2019, about potentially taking Tesla off the New York Stock Exchange are now infamous for the ensuing share volatility, and they may be the center of controversy once more. He tweeted that he had “funding secured” at $420 a share to take Tesla private. Seventeen days later, he backtracked and said that he wasn’t going to follow through with the plan. These tweets resulted in a $20 million settlement, for both Tesla and Musk, with the SEC.
The suit was filed in a Manhattan federal court. It says that the two corporate giants signed a deal in 2014 that stated JPMorgan Chase could purchase shares of Tesla at a set date and time. The agreement stated that JPMorgan Chase could set a “strike” price and date to hold the shares at. In this deal, if the “strike” shares had a lower price than the share price when the warrants expired, in the summer of 2021, then the bank could buy shares. According to JPMorgan Chase, the agreement contained provisions that allowed the company to protect itself from significant transactions involving Tesla.
Tesla’s share price has increased by over tenfold by the time that the warrants expired, and Tesla has not handed over the shares, according to the lawsuit. No statement has been publicly released by Tesla on the lawsuit. This lawsuit between the two corporate giants could have large implications for both, but especially Tesla and Musk.
