JPMorgan Chase claims Tesla hoodwinks investors, seeks $162 million damages

JPMorgan Chase & Co. sued Tesla Inc. on Monday over a 2017 stock warrant agreement that it says lets the automaker hoodwink investors into pushing down the value of Tesla’s common stock.

The $162 million lawsuit, filed in the U.S. District Court in Delaware, represents a broader effort by Wall Street banks to extract damages from the carmaker, which is facing a federal criminal investigation for an alleged $40 million wire fraud scheme.

Tesla did not immediately return a call seeking comment.

JPMorgan filed a lawsuit against the company in July over stock warrants it acquired for $140 million in 2017. The lawsuit, which was then pending, alleged that Tesla had fraudulently misled investors by masking a loss of a big order for its luxury Model 3 sedan.

Tesla adopted a policy in 2017 barring the disclosure of such a loss until the order was received, and it failed to disclose the loss immediately, the lawsuit said.

Both the U.S. Securities and Exchange Commission and the Department of Justice have been investigating Tesla over its use of public statements to falsely boost the market value of the electric vehicle maker’s stock.

The value of the rights have fallen from $252 million in July to $121 million at the end of last week, data from Refinitiv shows.

In addition to the lawsuit JPMorgan filed on Monday, the bank’s lawyers in July sent a letter to Chief Executive Elon Musk at Tesla demanding a retraction of what JPMorgan characterized as misleading statements by Musk about a confidence downgrade by the bank. Tesla said it did not receive the letter.

The Journal reported on Monday that the SEC declined to comment on whether the agency was investigating Tesla. An FBI spokeswoman declined to comment on a possible investigation, and the U.S. attorney’s office in Manhattan declined to comment.

Last month, Tesla cut its workforce by 9 percent of its roughly 53,000 workers and announced a restructuring that included the elimination of jobs at its Fremont factory.

The plant, which opened to great fanfare as the future home of the company’s mass-market sedan, the Model 3, was beset by manufacturing issues that Tesla blames on the anti-production bias of its former leadership.

Read the full story on CNBC.


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