b'2018, Tesla published a blog post announcing its intentionRejecting defendants argument that Tesla could not be to remain public. On September 27, 2018, the SEC filed aheld liable for Musk acting in his personal capacity, the complaint against Musk alleging violations of Section 10(b)court held that plaintiff had adequately pled that Musk of the Exchange Act and Rule 10b-5, followed by a secondwas speaking as the CEO of Tesla within the scope of his complaint alleging Musk violated Rule 13a-15. Tesla andauthority when he made the tweets at issue, pointing in Musk consented to judgments of $20 million apiece. particular to a November 2013 statement by Tesla in which Beginning on August 10, 2018, several investors filedTesla formally notified investors that it would use Musks class action complaints, claiming that Tesla and its CEOTwitter account as a formal means of communication. made false and misleading statements that Tesla hadMoreover, the court noted the complaint alleged that Tesla secured funding to take the company private in violationadopted Musks statements when its senior director of of Sections 10(b) and 20(a) of the 1934 Act and Rule 10b-5investor relations confirmed to analysts email inquiries promulgated thereunder. Defendants moved to dismissthat funding was secured per Musks tweets. Addressing the consolidated amended complaint on four grounds:scienter, the court rejected defendants argument that (1) that Musks statements were not misrepresentations;the August 7, 2018 tweet was a good-faith effort to (2) that Tesla itself made no statements because theinform shareholders of a potential transaction because posts were by Musk in his individual capacity; (3) thatof a suspected media leak, and pointed to statements plaintiff could not plead loss causation because stockby Musk that confirmed his awareness that the going-price decline was the result of a corrective disclosure;private transaction was far from secure. The court held and (4) that Musks tweets were not cleared by anyone atthat plaintiffs use of the temporal proximity between the Tesla, so the director defendants could not be individuallyfiling of the SEC complaint and settlement by Musk and liable. On December 27, 2019, plaintiff opposed theTeslas SEC was permissible as an allegation supporting motion to dismiss and filed a motion to strike thescienter. The court also held that the August 2, 2018 email motion to dismiss or have it converted into a motionsuggested motive to target short-sellers, perhaps by for summary judgment.making misleading statements.On April 15, 2020, the district court denied plaintiffsThe court next addressed plaintiffs loss causation motion to strike or convert, but also denied defendantstheory that (1) short-selling investors were forced to motion to dismiss. The court found that plaintiff hadprematurely cover their bets because of the artificially adequately pled the falsity of Musks August 7 tweetsinflated prices and (2) long investors bought at regarding take-private funding, noting that Mr. Musksartificially high prices and ultimately suffered losses subsequent colloquy with Twitter users confirmed thewhen the prices declined [sic] as the truth regarding the definitiveness of his representation about the going- lack of secured funding became known. With respect private decision being unimpeded by funding conditions.to short-sellers, the court held that plaintiff pled facts However, the court held plaintiff had not sufficiently pledsufficient to allege that the stock price fluctuations that the August 13, 2018 blog post was false or misleading,were related to defendants false and then corrective as it eventually (and truthfully) revealed that the [funding]statements by alleging short-sellers were forced to deal was subject to further scrutiny. cover transactions at significant loss following Musks statements. Regarding long-sellers, the court held plaintiff sufficiently pled a series of disclosing eventseach one having a causal relationship with the decline Rejecting defendants argument that Teslaof stock prices that ties back to the funding secured false statementthat permits a reasonable inference could not be held liable for Musk acting insufficient to survive a motion to dismiss. Thecourt his personal capacity, the court held thatrejected defendants argument that the August 17 Wall Street Journal couldnt be a corrective disclosure, plaintiff had adequately pled that Muskholding that it had injected new information regarding was speaking as the CEO of Tesla withinthe August 7 tweet into the market and that while it had contained the writers opinions, it also contained direct the scope of his authority when he madequotes from Musk. The court noted this article may not the tweets at issue, pointing in particularbe admissible down the line but declined to make a determination at the pleadings stage. to a November 2013 statement by Tesla inThe court further denied defendants motion to dismiss which Tesla formally notified investors thatthe Section 20 claim against the director defendants, it would use Musks Twitter account as aholding that plaintiff had pled in detail how the Director Defendants were involved in the aftermath of the formal means of communication.August 7, 2018 tweet, and arguably adopted the false and misleading representations. 19'