JPMorgan Chase sues Tesla for Musk tweet that affected finance agreement

“We have provided Tesla multiple opportunities to fulfill its contractual obligations, so it is unfortunate that they have forced this issue into litigation,” a spokesperson for JPMorgan said.

WARREN AND JPMORGAN’S JAMIE DIMON GET IN HEATED EXCHANGE OVER BANK OVERDRAFT FEES

A warrant is a contract in which a company agrees to allow an investor to purchase a set amount of shares at a fixed price for a prescribed period of time. Investors are typically not obligated to purchase the shares. They reserve the right to purchase a certain amount of them at a set price for that period of time.

The dispute between JPMorgan and Tesla began after JPMorgan adjusted the value of its warrants in response to Elon Musk’s 2018 tweet that he was considering taking Tesla private. His tweet sent Tesla share prices soaring but also subsequently landed him in hot water with the Securities and Exchange Commission, which ordered Musk and Tesla to pay $20 million in fines as a result.

JPMorgan argued it had a contractual right to make adjustments, while Tesla argued that the changes were “unreasonably swift and represented an opportunistic attempt to take advantage of changes in volatility in Tesla’s stock,” according to CNBC.

JPMorgan asserted that the market reaction to Musk’s tweet decreased the value of its warrants, so it reduced its strike price to maintain “fair market value” of the warrants — a lower strict price means that Tesla’s financial obligation increases.

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JPMorgan said the breach of contract means that Tesla owes it over $162 million, which accounts for a little less than 3% of the total transaction.

The Washington Examiner reached out to Tesla for comment but did not receive a response.