A sign is seen on the Canary Wharf offices of JP Morgan in London. File
| Photo Credit: Reuters
U.S. lender JPMorgan Chase agreed on Friday (November 29, 2024) to drop its lawsuit against Tesla that accused the electric vehicle maker of “flagrantly” breaching a contract between the two companies in 2014 relating to warrants Tesla sold to the bank.
The move to drop the lawsuit was announced in a one-page court filing by both companies in a Manhattan court, where they said they will drop their claims against each other.
Bloomberg News reported the settlement earlier on Friday.
Neither company disclosed settlement terms, according to the court filings.
JPMorgan and Tesla did not immediately respond to Reuters’ requests for comment.
JPMorgan sued Tesla in November 2021, seeking $162.2 million, alleging that Tesla breached a 2014 contract related to stock warrants it sold to the bank, and which the bank believes became more valuable because of a 2018 tweet by Tesla CEO Elon Musk.
Warrants give the holder the right to buy a company’s stock at a set “strike” price and date.
Musk’s August 7, 2018 tweet that he might take Tesla private at $420 per share and had “funding secured,” and his subsequent announcement 17 days later that he was abandoning the plan, created significant volatility in the share price, the bank said. On both occasions, JP Morgan adjusted the strike price “to maintain the same fair market value” as prior to the tweets, the bank said.
JP Morgan said it was obligated to reprice the warrants after Musk’s tweet, and that a subsequent 10-fold increase in Tesla’s stock price required that company to make payments, which it had not done.
Tesla countersued JP Morgan in January 2023, accusing the bank of seeking a “windfall” when it repriced the warrants.
Mr. Musk, who bought Twitter for $44 billion in 2022, agreed in a 2018 deal with the U.S. Securities and Exchange Commission to get pre-approval from a Tesla lawyer for some tweets.
Published – November 30, 2024 10:50 am IST
