On Monday, JP Morgan Chase Bank filed a lawsuit against Tesla Inc. at the U.S. District Court, Southern District of New York, which is in Manhattan. The bank said that the electric vehicle (EV) maker failed to make payments to the bank on warrants deal. The lawsuit centers around a highly controversial episode in Elon Musk’s career at Tesla.
In the filing, the Wall Street bank said that warrants sold by the EV maker had required an adjustment in the positions by the bank after a post on Twitter by Musk, where he said that he had “funding secured” that would acquire the company at $420 a share.
Later, Tesla announced that the transaction would not go through and the value of the warrants changed, once again. The bank that it became necessary for it to change its position, again. JP Morgan is seeking $162 million in cash or stock.
In the complaint, the bank said that although “JP Morgan’s adjustments were appropriate and contractually required Tesla” had “refused to settle at the contractual price and pay in full” the amount that Tesla “owes to JP Morgan.”
That infamous tweet also lead to an investigation by the U.S. Securities and Exchanges Commission (SEC). The SEC charged the company with securities fraud. The regulatory body said that Musk mislead the market, with his post. He ultimately stepped down as Tesla’s chair and the company paid a fine of $40 million.
In February 2019 Tesla had written to the bank and argued that the adjustments JP Morgan had made six months earlier had been “unreasonably swift and represented an opportunistic attempt to take advantage of changes in volatility in Tesla’s stock.”
However, the bank asserts that Tesla didn’t specifically challenge its calculations nor did it back up its earlier assertion and had not objected in the past two years.
JP Morgan released a statement saying that they had “provided Tesla multiple opportunities to fulfil its contractual obligations.” Unfortunately the EV maker had not responded so they had “forced this issue to litigation.”
Several outlets asked Tesla for comment but none have received a response, as yet.