Friday, December 3rd, 2021

Why JPMorgan is suing Tesla in federal court for $162 million

“Though JPMorgan’s adjustments were appropriate and contractually required,” the complaint said, “Tesla has flagrantly ignored its clear contractual obligation to pay JPMorgan in full.”

Tesla did not immediately respond to requests for comment after market hours.

According to the complaint, Tesla sold the warrants to reduce potential stock dilution from a separate convertible bond sale and to lower its federal income taxes.

JPMorgan said it had been contractually entitled to adjust the warrants’ terms following “significant corporate transactions involving Tesla.”

The automaker in February 2019 complained that the bank’s adjustments were “an opportunistic attempt to take advantage of changes in volatility in Tesla’s stock,” but did not challenge the underlying calculations, JPMorgan said.

Musk’s tweets led to U.S. Securities and Exchange Commission civil charges and $20 million fines against both him and Tesla.

The case is JPMorgan Chase Bank v. Tesla Inc., 21-cv-09441, U.S. District Court, Southern District of New York (Manhattan).

Bloomberg contributed to this report.

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