Elon Musk is not off the hook yet for the August 2018 tweet that landed him at the center of an investigation by the U.S. Securities and Exchange Commission (“SEC”). On the heels of a whopping $40 million settlement with the SEC, which alleged that the 47-year old South African billionaire’s tweet that he was “considering taking [publicly-listed] Tesla private at $420. Funding secured,” contained “false and misleading statements,” and that he “knew or was reckless in not knowing [were] false and/or misleading,” Musk has been slapped with a number of big-money lawsuits, accusing him of artificially inflating Tesla’s stock price and violating federal securities laws with the misleading tweet.
Now, one of those suits is heating up in a federal court in San Francisco, with the Tesla investor plaintiffs seeking to get information from Musk’s ex-girlfriend, Claire Elise Boucher, who goes by the stage name, Grimes, and fellow musician Azealia Banks, the latter of whom alleged in subsequent social media posts that Musk was using drugs at the time of the tweet that boosted stock prices for the NASDAQ-traded Tesla.
“Ms. Boucher and Ms. Banks were in close contact with Mr. Musk before and after the tweet at issue and are believed to be in possession of relevant evidence concerning Mr. Musk’s motives,” Eduard Korsinsky of Levi & Korsinsky, the firm representing the plaintiffs, told CNBC. “Granting the motion [to subpoena the two women] would allow the plaintiffs to preserve this evidence and help provide a fair opportunity to take discovery for all parties.”
Beyond Banks and Boucher, the plaintiffs are also seeking information from the New York Times, Gizmodo, and Business Insider reporters, all of which interviewed Banks and/or Musk this summer and likely “have information bearing on the veracity of Musk’s tweet.”
Counsel for Musk, Dean Kristy of Fenwick & West, has since attempted to shut down the proposed subpoenas, arguing in a filing this past week that adding the famous figures into the mix clearly represents an effort to “sensationalize these proceedings” – potentially in an effort to force a high sum settlement out of Musk and Tesla – rather than to serve a legitimate fact-finding purpose.
In terms of Banks, specifically, Kristy asserts that plaintiffs have called her as a “key source of information in this matter” regardless of the existence of widespread “reports that completely undermine her credibility,” including her reputation as a “veteran of long and nonsensical beefs [having] feuded with everyone from Sarah Palin to Nick Cannon.” The plaintiffs’ reliance on Banks, according to Kristy, “underscores how weak the plaintiff’s case is – based entirely on her claim that she was present in Mr. Musk’s home to visit Ms. Boucher from August 10-12 (well after the August 7 tweets) and supposedly observed Mr. Musk, even though he flatly denies ever meeting her.”
Banks has since responded to Musk’s filing – on social media, naturally – saying, “Elon needs to just speak to me directly [because] this is getting out of hand. Kristy can bash me all he wants but I’m not the one who’s going to lose here.”
“This is going to get extremely ugly,” she further stated. “Elon will learn very soon who is more powerful of us two.”
While the plaintiffs claim that subpoenas for Banks, Boucher, and the three media outlets are, in fact, “necessary,” Kristy claims that their counsel “did not bother to contact any of the five non-parties it intends to subpoena to find out if they even have any relevant information.”
“None of the third parties ever worked for Tesla or Mr. Musk,” he notes. “Nor [are the parties] alleged to have had any involvement in his tweets or in his evaluation of a potential go-private transaction.”
*The case is Kalman Isaacs, individually and on behalf of all others similarly situated, vs. Elon Musk and Tesla, Inc., 3:18-cv-04865 (N.D. Cal).