Should JPMorgan be upset about a tweet from Elon Musk?

Last week, Tesla announced that it had received an $850 million loan from a group of banks. The Silicon Valley car company didn’t say who was lending it the money, but lawyers believe that…

Should JPMorgan be upset about a tweet from Elon Musk?

Last week, Tesla announced that it had received an $850 million loan from a group of banks. The Silicon Valley car company didn’t say who was lending it the money, but lawyers believe that JPMorgan Chase was a “lead arranger” for the loan. According to the Wall Street Journal, JPMorgan, however, was apparently very unhappy about the fact that Tesla CEO Elon Musk tweeted a couple of months ago that the company was looking for an additional $1 billion in funding, much of which was not disclosed to investors.

The tweet concerned JPMorgan, who wrote to Tesla asking it to cancel its plans to raise $1 billion — and to instead pay the bank for the work it did arranging the bank loan, because the tweet violated rules that regulators set out for how publicly traded companies must handle their communications with shareholders. Tesla told JPMorgan it would meet with the bank at the end of the week, but after the meeting, JPMorgan proceeded to ask Musk and Tesla to pay it $162 million because the tweet “was erroneous and an error of law.”

Tesla has largely refused to go along with JPMorgan’s demand, and as of yet the company has not revealed a list of who else worked on the $850 million loan, or disclosed any of the companies that provided it with funding for the equity financing round. No company publicly issued a statement on Tesla’s request to cancel the $1 billion funding round, and no company publicly publicly voiced its disapproval of a tweet saying the company’s needs were much higher than what it had communicated.

Twitter has maintained that its text-based service is simply meant to be a platform for entertaining and informative conversations. But in the eyes of the Securities and Exchange Commission, which ordered the company to pay a $20 million fine for violations of its own rules regarding public communications, it can still have negative effects.

Read the full story at The Wall Street Journal.

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