Wednesday, February 21

Tesla countersues JPMorgan in fight over injunctions

Tesla INC.

TSLA -5.28%

countersued JPMorgan Chase JPM -3.03%

& Co. on Monday, escalating a dispute over payment for a bond sale the bank helped organize in 2014.

JPMorgan began the fight with a lawsuit in November, claiming that it was owed about $162 million more for a set of collateral it had purchased as part of the bond sale. Tesla said Monday that the bank was not entitled to the billions of dollars in shares it got last year from those guarantees.

The dispute is raising the curtain on a testy relationship between the country’s largest bank and the world’s most valuable automaker. JPMorgan has been rebuffed by Tesla in business deals and executives from the companies have clashed, including CEOs Jamie Dimon and Elon Musk, The Wall Street Journal reported.

Tesla claimed that the dispute is what is really behind the JPMorgan lawsuit. He alleged that the bank’s actions amounted to “bad faith and greed.”

“JPM pressed its exorbitant lawsuit as an act of retaliation against Tesla, both for having bypassed JPM in major business deals and because of JPM’s top executives’ animosity toward Mr. Musk,” Tesla alleged.

Musk said he would write a one-star review on Yelp if the bank didn’t drop the lawsuit.

JPMorgan said Monday that “their claim has no merit. This boils down to fulfilling contractual obligations.”

The dispute centers on one of Musk’s most turbulent episodes, when he toyed with Tesla’s privatization in 2018. He was later forced to relinquish his title as chairman in a settlement with the Securities and Exchange Commission over his tweets to the public. respect.

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In 2014, JPMorgan purchased Tesla securities as part of a convertible bond sale in which it worked for the automaker with other banks. The warrants allowed banks to purchase Tesla shares at a fixed price when they expired in June and July 2021.

JPMorgan has claimed that Musk affected the value of the collateral when he tweeted in 2018 that he had the funds to take Tesla private. The bank used his tweets as justification to lower the strike price of the warrants, allowing it to make more profit if Tesla shares continued to rise.

Last summer, Tesla paid at the original price but refused to accept JPMorgan’s change. The bank obtained billions of dollars in shares, Tesla said Monday.

Tesla said Monday that JPMorgan had no right to make the switch and demand more money, in part because it said the bank didn’t really believe Musk would take Tesla private. He said that Musk’s tweets did not affect the value and that none of the other banks made the change.

Tesla said the bank broke the contract and should have instead canceled the warranties and returned them. The suit seeks unspecified damages and fees from the bank.

In 2021, billionaire CEO Elon Musk hit several milestones at Tesla, SpaceX, and Starlink. WSJ reporters Rebecca Elliott and Micah Maidenberg break down some of their biggest moments in 2021 and what’s to come in 2022. Illustration: Tom Grillo (12/27/21 video)

write to David Benoit at [email protected]

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