Get Premium Data for Cyber Monday: Up to 55% Off InvestingProCLAIM SALE

JPMorgan agrees to drop lawsuit against Tesla over stock warrants

Published 11/29/2024, 09:48 PM
Updated 11/30/2024, 05:26 PM
© Reuters. Tesla logo is placed on the vehicle at the 41st Thailand International Motor Expo, in Bangkok, Thailand, November 29, 2024. REUTERS/Athit Perawongmetha/File Photo
JPM
-
TSLA
-

(Reuters) -U.S. lender JPMorgan Chase (NYSE:JPM) agreed on Friday to drop its lawsuit against Tesla (NASDAQ:TSLA) that accused the electric vehicle maker of "flagrantly" breaching a contract between the two companies in 2014 relating to warrants Tesla sold to the bank.

The move to drop the lawsuit was announced in a one-page court filing by both companies in a Manhattan court, where they said they will drop their claims against each other.

Bloomberg News reported the settlement earlier on Friday.

Neither company disclosed settlement terms, according to the court filings.

Tesla did not respond to Reuters' requests for comment.

"JPMorgan and Tesla have decided to enter into a new commercial relationship and settle the outstanding disputes between the companies," a JPMorgan spokesperson said in a statement on Saturday.

"This is a good outcome for all and we look forward to working together," the spokesperson added.

JPMorgan sued Tesla in November 2021, seeking $162.2 million, alleging that Tesla breached a 2014 contract related to stock warrants it sold to the bank, and which the bank believes became more valuable because of a 2018 tweet by Tesla CEO Elon Musk.

Warrants give the holder the right to buy a company's stock at a set "strike" price and date.

Musk's Aug. 7, 2018 tweet that he might take Tesla private at $420 per share and had "funding secured," and his subsequent announcement 17 days later that he was abandoning the plan, created significant volatility in the share price, the bank said. On both occasions, JPMorgan adjusted the strike price "to maintain the same fair market value" as prior to the tweets, the bank said.

JPMorgan said it was obligated to reprice the warrants after Musk's tweet, and that a subsequent 10-fold increase in Tesla's stock price required that company to make payments, which it had not done.

© Reuters. Tesla logo is placed on the vehicle at the 41st Thailand International Motor Expo, in Bangkok, Thailand, November 29, 2024. REUTERS/Athit Perawongmetha/File Photo

Tesla countersued JPMorgan in January 2023, accusing the bank of seeking a "windfall" when it repriced the warrants.

Musk, who bought Twitter for $44 billion in 2022, agreed in a 2018 deal with the U.S. Securities and Exchange Commission to get pre-approval from a Tesla lawyer for some tweets.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.