By Michael Liedtke in San Francisco
SAN FRANCISCO (AP) — Elon Musk took the witness stand Friday to defend a 2018 tweet claiming he had lined up the financing to take Tesla private in a deal that never came close to happening.
The tweet resulted in a $40 million settlement with securities regulators. It also led to a class-action lawsuit alleging he misled investors, pulling him into court for about a half hour Friday to deliver sworn testimony in front of a nine-person jury and a full room of media and other spectators.
The trial was then adjourned for the weekend and Musk was told to return Monday to answer more questions.
In his initial appearance on the stand, Musk defended his prolific tweeting as “the most democratic way” to distribute information even while acknowledging constraints of Twitter’s 280-character limit can make it difficult to make everything as clear as possible.
“I think you can absolutely be truthful (on Twitter),” Musk asserted on the stand. “But can you be comprehensive? Of course not,”
Musk’s latest headache stems from the inherent brevity on Twitter, a service that he has been running since completing his $44 billion purchase of it in October.
The trial hinges on the question of whether a pair of tweets that Musk posted on Aug. 7, 2018, damaged Tesla shareholders during a 10-day period leading up to a Musk admission that the buyout he had envisioned wasn’t going to happen.
In the first of those those two 2018 tweets, Musk stated “funding secured” for a what would have been a $72 billion buyout of Tesla at a time when the electric automaker was still grapping with production problems and was worth far less than it is now. Musk followed up a few hours later with another tweetsuggesting a deal was imminent.
After it became apparent that the money wasn’t in place to take Tesla private, Musk stepped down as Tesla’s chairman while remaining CEO as part of the Securities and Exchange Commission settlement, without acknowledging any wrongdoing.
The impulsive billionaire came into court wearing a dark suit and tie on the third day of the civil trial in San Francisco that his lawyer unsuccessfully tried to move to Texas, where Tesla is now headquartered, on the premise that media coverage of his tumultuous takeover of Twitter had tainted the jury pool.
The jury that was assembled earlier this week focused intently on Musk while he answered questions posed by Nicholas Porritt, a lawyer representing Tesla shareholders. At one point, Musk asked Porritt if he would speak closer to the microphone so he could hear him better. At other times, Musk craned his neck as he gazed around the courtroom.
Musk, 51, said he cares “a great deal” about investors and also railed against short sellers who make investments that reward them when a company’s stock price falls. He called short selling an “evil” practice that should be outlawed, denigrating those who profit from it as “a bunch of sharks.”
When shown communications from Tesla investors urging him to curtail or completely stop his Twitter habit before the 2018 buyout tweet, Musk said he couldn’t remember all those interactions from years ago, especially since he gets a “Niagara Falls” of emails.
Even before Musk took the stand, U.S. District Judge Edward Chen had declared that the jurors can consider those two tweets to be false, leaving them to decide whether Musk deliberately deceived investors and whether his statements saddled them with losses.
Musk has previously contended he entered into the SEC settlement under duress and maintained he believed he had locked up financial backing for a Tesla buyout during meetings with representatives from Saudi Arabia’s Public Investment Fund.
An expert on corporate buyouts hired by shareholder lawyers to study the events surrounding Musk’s proposal to take Tesla private spent the bulk of his three hours on the stand Friday deriding the plan as an ill-conceived concept.
“This proposal was an extreme outlier,” said Guhan Subramanian, a Harvard University business and law professor for more than 20 years. “It was incoherent. It was illusory.”
In a lengthy cross examination that delayed Musk’s appearance, a lawyer for Tesla’s board of directors tried to undermine Subramanian’s testimony by pointing out that it relied on graduate student assistance to review some of the material related to the August 2018 tweets. The lawyer, William Price, also noted Subramanian’s $1,900-per-hour fee for compiling his report for the case.
The trial over his Tesla tweets come at a time when Musk has been focusing on Twitter while also serving as the automaker’s CEO and also remaining deeply involved in SpaceX, the rocket ship company he founded.
Musk’s leadership of Twitter — where he has gutted the staff and alienated users and advertisers — has proven unpopular among Tesla’s current stockholders, who are worried he has been devoting less time steering the automaker at a time of intensifying competition. Those concerns contributed to a 65% decline in Tesla’s stock last year that wiped out more than $700 billion in shareholder wealth — far more than the $14 billion swing in fortune that occurred between the company’s high and low stock prices during the Aug. 7-17, 2018 period covered in the class-action lawsuit.
Tesla’s stock has split twice since then, making the $420 buyout price cited in his 2018 tweet worth $28 on adjusted basis now. The company’s shares were trading around $133.42 Friday, down from the company’s November 2021 split-adjusted peak of $414.50.
After Musk dropped the idea of a Tesla buyout, the company overcame its production problems, resulting in a rapid upturn in car sales that caused its stock to soar and minted Musk as the world’s richest person until he bought Twitter. Musk dropped from the top spot on the wealth list after the stock market’s backlash to his handling of Twitter.
When asked Friday about the challenges that Tesla faced in 2018, he recalled spending many nights sleeping at the automaker’s California factory as he tried to keep the company afloat.
“The sheer level of pain to make Tesla successful during that 2017, 2018 period was excruciating,” he recalled.
Immigration increase alone won’t fix the labour market, experts say
By Rosa Saba
Experts say Canada’s plan to increase immigration may ease some pressures in the labour market, but bigger changes are needed to ensure new permanent residents are matched with the jobs that most need filling.
With the unemployment rate at historic lows, many companies are “starved” for workers, and new immigrants will help fill some of the need, said Ravi Jain, principal at Jain Immigration Law and co-founder of the Canadian Immigration Lawyers Association.
The federal government’s new immigration plan calls for the admission of 1.45 million more new permanent residents over the next three years, beginning with 465,000 in 2023 and reaching 500,000 in 2025. That’s compared with 341,000 in 2019.
According to Immigration, Refugees and Citizenship Canada, the plan is intended to help attract labour in key sectors, including healthcare, skilled trades, manufacturing and technology.
“It’s clear that there are real gaps, real demands, and real needs,” said Naomi Alboim, a senior policy fellow at Toronto Metropolitan University and a former Ontario Deputy Minister of Immigration.
But upping immigration levels is just one way to begin addressing those needs, she said — the government’s plan should be part of a wider initiative to address temporary workers, international students and a larger range of jobs.
Change is needed to ensure new Canadians are well-matched to jobs that maximize their skills, qualifications and experience, said Alboim.
Recent immigrants are less likely to see their skills and education utilized than Canadian-born workers, Statistics Canada said, and new and recent immigrants are overrepresented in certain industries, including transportation and warehousing, and accommodation and food services.
Government policies have created a mismatch between the specific skills employers are looking for and the skills of immigrants being approved, Toronto immigration lawyer Sergio Karas said.
Some of this mismatch begins with international students, said Karas. Though many international students plan to become permanent residents after they graduate, many of them aren’t in programs for jobs that are in demand by immigration policies, like healthcare or trades, he said.
International students and temporary foreign workers (TFWs) have made up an increasingly large portion of Canada’s economic immigrants, or those selected for their contribution to the economy, who made up more than half of recent immigrants in 2021, Statistics Canada said.
In 2020, 67 per cent of the country’s principal applicants in the economic class were previously temporary foreign workers or international students, the agency said.
But that 67 per cent is a relatively small portion of all the temporary workers and international students in Canada, said Alboim. Canada had 777,000 TFW work permit holders in 2021, and almost 622,000 international students that year, Statistics Canada said.
Canada’s dependence on temporary workers to fill long-term gaps is a huge problem, said Alboim. It creates little incentive to improve wages, conditions or supports for temporary workers, she said.
Federal immigration policy seems laser-focused on jobs requiring higher levels of training and education, said Alboim, a barrier to permanent residency for many TFWs and international students.
That’s despite the fact that much of Canada’s labour shortage is in jobs that require lower levels of education or experience, jobs that many temporary workers and students take on, said Alboim.
The federal government should expand its scope to prioritize more of these kinds of jobs, she said.
“There are way, way, way more people here now with temporary status that will never be able to transition to permanent residency, assuming they want to, unless the rules for permanent residency are changed to recognize that we actually need them too,” she said.
However, not all the onus lies on the federal government, Jain said. One ongoing problem has been immigrants’ credentials not being recognized in Canada, and while there have been some recent changes aimed at improving that, more needs to be done, he said. These credentials are the jurisdiction of provinces and territories, not Ottawa.
Provincial and regional immigration programs often do a better job of bringing in workers who can meet a wide range of labour needs including in lower-skill jobs, Alboim said, noting those programs are set to increase under the federal government’s plan.
A legislative amendment recently gave the minister of immigration the power to select immigrants for Express Entry programs based on specific qualities like occupation, but currently Alboim anticipates that use of that power will be focused on higher-level jobs.
“(There are) real needs at the high end, which immigration should certainly be focused on, but not exclusively,” she said.
“My worry is that if the targeted draws get too heavy, like if it’s weighted too much in terms of the proportion of people coming in, then I worry that some of these other folks will get marginalized,” he said.
“There needs to be some kind of a balance.”
— With files from Lee Berthiaume
This report by The Canadian Press was first published Jan. 19, 2023.
Popular roller-coaster at West Edmonton Mall amusement park to be removed
Canada’s largest shopping centre says a popular roller-coaster at its amusement park is being removed after nearly 40 years in operation.
West Edmonton Mall’s vice-president of parks and attractions says in a statement that while the Mindbender will be missed, the mall is excited to announce it is working on new plans for the site.
The Mindbender was known as the world’s tallest and longest indoor, triple-loop roller-coaster.
In 1986, three people were killed on the roller-coaster, which forced the mall to shut it down for a year for safety modifications.
Galaxyland initially opened in 1983, but was known as Fantasyland until 1995.
The indoor amusement park partnered with Hasbro in 2022 and features attractions licensed from the franchise.
This report by The Canadian Press was first published Jan. 30, 2023.
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