Tesla countersued JPMorgan Chase over a suit the bank filed last year seeking a $162 million payment related to a series of stock warrant transactions.
The automaker said in a complaint in federal court in New York on Monday that JPMorgan took advantage of an August 2018 tweet by Elon Musk to reduce the strike price of more than 1.9 million warrants it acquired on Tesla shares in 2014. Tesla called JPMorgan’s suit a “cynical” attempt to reap a windfall from the deal.
JPMorgan denied Tesla’s claims in a statement. “There is no merit to their claim,” a representative for the bank said. “This comes down to fulfilling contractual obligations.”
JPMorgan sued Tesla in November, saying that Tesla failed to pay $162 million it was owed from the transaction. The bank bought the warrants in 2014 to help the automaker mitigate risk that its stock would be diluted by the issuance of convertible notes and to make certain federal income tax deductions. If the stock traded above a certain price, Tesla would owe JPMorgan a payment of shares or cash.
The bank says it had the right to change the strike price based on certain factors that included stock volatility, and made two adjustments in August 2018, one after Musk tweeted that he had secured the funding to take Tesla private and when he gave up the effort several weeks later.
But Tesla says that JPMorgan misused Musk’s tweet in order to lower the strike price in its own favor in violation of its agreement.
JPMorgan’s “manipulation of the strike price was entirely self-serving and in breach of the parties’ agreement,” Tesla said in its filing Monday. The bank “dealt itself a pure windfall, drastically reducing the price it would ultimately pay Tesla for shares in connection with the warrants, on the pretext that Tesla was on the verge of going private. But Mr. Musk never announced a take-private proposal, and less than three weeks after the initial tweet, he confirmed that no offer would be forthcoming.”
The case is JPMorgan Chase Bank, NA , London Branch, v Tesla Inc., 21-cv-9441, U.S. District Court, Southern District of New York.
