The filing did not provide details about any settlement terms, leaving it unclear whether Tesla paid JPMorgan or the parties agreed to other terms.
JPMorgan Chase has voluntarily dismissed its lawsuit against Tesla, bringing an end to the nearly three-year legal battle over a series of stock warrants and Elon Musk’s infamous 2018 post on Twitter, now X, about taking Tesla private.
The stipulation of voluntary dismissal was
entered on Nov. 29 at the U.S. District Court for the Southern District of New York and signed by attorneys for both parties. The case has been dismissed with prejudice, meaning that JPMorgan can’t refile the lawsuit.
The banking giant
brought the lawsuit in 2021, accusing Tesla of breaching its contractual obligations by failing to meet the terms of the warrant transactions, and sought more than $162 million in damages.
The filing did not provide details about any settlement terms, leaving it unclear as to whether Tesla paid JPMorgan or the parties agreed upon other terms to resolve the lawsuit.
The dispute stemmed from a series of warrant transactions between JPMorgan and Tesla in 2014, when the electric vehicle manufacturer sold stock warrants to the bank. These warrants, which were similar to call options, gave JPMorgan the right to buy Tesla stock at a predetermined strike price if Tesla’s share price exceeded that price when the warrants expired. The core issue arose from the events of August 2018, when Musk, Tesla’s CEO, posted a
message on Twitter that he was considering taking Tesla private at $420 per share, claiming that “funding [was] secured.”
Musk’s post caused immediate upheaval in the stock market, with Tesla’s share price spiking as investors reacted to the news. This led JPMorgan, which was acting as the “calculation agent” for the warrant transactions, to adjust the strike price of the warrants to account for the economic effects of Musk’s post, which the bank deemed to be an “announcement event” under the governing agreements. Tesla objected to the adjustments, leading to a dispute over the appropriate value of the warrants.
Several weeks later, Musk reversed the deal that would have taken Tesla private, prompting JPMorgan to adjust the strike price again, ultimately setting it at a level more favorable to itself. Over Tesla’s objections, JPMorgan argued that it was acting within the terms of the agreement, which granted it considerable discretion as the calculation agent, provided that it acted in good faith. By the time the warrants expired in 2021, Tesla’s stock price had soared far above the adjusted strike price, and JPMorgan demanded either the delivery of the shares or cash, as stipulated by the contract.
Tesla refused to comply, however, leading the bank to file its lawsuit in November 2021, accusing Tesla of having “flagrantly ignored its clear contractual obligation to pay JPMorgan in full,” and demanding $162 million in damages. The case drew considerable attention, in part because of its connection to Musk’s controversial post, which led to separate legal and regulatory issues for the Tesla CEO.
In September 2018, Musk
settled fraud charges brought by the Securities and Exchange Commission, which alleged that the “funding secured” claim was misleading. As part of the settlement, Musk agreed to step down as Tesla’s chairman for three years, and Musk and Tesla paid $20 million each in fines. Musk’s tweet also sparked shareholder lawsuits and a broader debate over the effects of his public statements on Tesla’s valuation and market volatility.
Musk recently scored a
legal victory in a lawsuit brought by a group of Tesla investors, who claimed that his “funding secured” tweet and other posts were misleading and caused them to suffer as much as $12 billion in financial losses as the stock price whipsawed. The Tesla CEO, who spent hours on the witness stand in the case, argued that he had no ill motive and genuinely believed that the funding had been secured after holding discussions with potential investors.
