JPMorgan takes Tesla to court over unpaid warrants & Elon Musk’s tweets

JPMorgan contends that the Aug. 7, 2018 tweet constituted a substantial corporate transaction that authorised it to alter the strike price, which it did to keep the strike price at the same fair market value as before the announcement.

JPMorgan Chase & Co has sued Tesla, seeking payment of $162 million for warrants that expired above their strike price. The situation had been muddled by Tesla creator Elon Musk’s proposal to take the electric car firm private in a tweet in 2018.

JPMorgan contends that the Aug. 7, 2018 tweet amounted to a substantial corporate transaction that authorised it to alter the strike price, which it did in order to keep the strike price at the same fair market value as before the announcement. JPMorgan re-adjusted the strike price to reflect the increase in the share price after Tesla abandoned the going-private transaction on August 24 of that year.

“Even though JPMorgan’s changes were appropriate and contractually required,” the bank wrote in a complaint filed in federal court in Manhattan on Monday. “Tesla has refused to settle at the contractual strike price and pay in full what it owes to JPMorgan.” “Tesla has broken its contract in the most egregious way possible. As a result, Tesla owes JPMorgan more than US$162 million right away.”

The automaker complained in February 2019 that the bank’s revisions were “an opportunistic attempt to take advantage of swings in volatility in Tesla’s shares,” but JPMorgan maintained the manufacturer did not contest the underlying calculations. Musk and Tesla were each fined $20 million by the US Securities and Exchange Commission as a result of Musk’s comments.

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