- Newly unsealed documents show that eight Tesla shareholders have accused Elon Musk of buying the solar-panel company SolarCity at an inflated price in 2016 to bail it out.
- Tesla acquired SolarCity – which was founded by Musk’s cousins, Lyndon and Peter Rive – for more than $US2 billion in 2016.
- The suit also claims that Musk used SpaceX to prop up SolarCity before the acquisition.
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Angry Tesla shareholders have filed a lawsuit against the company over its acquisition of the solar-panel company SolarCity in 2016.
The opening brief for the lawsuit, unsealed on Monday, was filed in 2016 and had been available but heavily redacted, CNBC reported. The eight listed plaintiffs, mostly pension funds, gained class-action status in April.
They allege that Tesla acquired SolarCity – which was founded by Musk’s cousins, Lyndon and Peter Rive – at an inflated price.
The suit claims that SolarCity was by 2015 barreling toward a “major liquidity crisis” and that Musk used SpaceX to buy a total of $US255 million worth of SolarCity bonds from March 2015 to March 2016.
“These bond purchases violated SpaceX’s own internal policy, and SolarCity was the only public company in which SpaceX made any investments,” the suit says.
The suit further alleges that after Musk met Lyndon Rive at a family vacation at Lake Tahoe in 2016, Musk convened an “emergency meeting” of Tesla’s board and told his chief financial officer at the time, Jason Wheeler, to pitch acquiring SolarCity.
The lawsuit claims that immediately after the acquisition closed at roughly $US2.6 billion, SolarCity’s auditors declared the company insolvent.
Musk isn’t the only Tesla executive named in the suit – it alleges that the intertwining of Tesla, SpaceX, and SolarCity led to conflicts of fiduciary interest for Tesla’s board of directors, which includes Musk’s brother, Kimbal.
SpaceX was not immediately available for comment. A Tesla representative told Business Insider: “These allegations are based on the claims of plaintiff’s lawyers looking for a payday, and are not representative of our shareholders who support our mission and ultimately voted in favour of the acquisition.
“The accusations made in the plaintiff’s brief are false and misleading, as Tesla and SolarCity published all material information in its proxy and other public filings for all shareholders to consider before deciding on the transaction.”
The unsealed filings come at an awkward moment for Tesla, which is being sued by Walmart over its solar-panel business; Walmart says the panels caught fire at seven stores.