Respond to tweet: JPMorgan wants to bring Tesla to default

Respond to tweet: JPMorgan wants to bring Tesla to default


Investment bank JPMorgan Chase & Co has filed a lawsuit against Tesla and its founder, Elon Musk. The amount of the claim is $ 162.2 million, and the reason for going to court was for a serious violation of a contract signed by the companies in 2014.

This was reported by RBC-Ukraine Auto with reference to Reuters.

The bank accuses Elon Musk of violating the terms of payment under a contract signed in 2014 and related to warrants on Tesla shares.

A warrant gives the holder the right to buy a share at a specified strike price. The lawsuit stems from how JPMorgan overvalued its Tesla warrants in 2018. The bank claims the warrants contained standard clauses that allowed it to adjust the price to protect itself from the economic impact of corporate transactions involving Tesla.

The asset revaluation came after Musk tweeted on August 7, 2018 that he could buy back Tesla at $ 420 per share. The bank then changed the price again 17 days later when Musk said it was abandoning the plan. JPMorgan Chase claims they have adjusted their strike price both times to maintain the same fair market value as before the tweets were posted.

In 2019, Tesla described the adjustments as an attempt to take advantage of changes in the volatility of Tesla stock. However, according to JPMorgan Chase, the automaker did not dispute the financiers’ calculations. The warrants expired in June and July, when the automaker’s shares were skyrocketing. JPMorgan Chase requires Tesla to transfer part of its shares or cash under the contract. According to bankers, the automaker’s failure to do so is “tantamount to default.”

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