Elon Musk's electricity car company is being accused of "flagrantly" breaching a contract related to stock warrants after its share price soared.
JPMorgan has filed a complaint in Manhattan federal court stating that Tesla in 2014 sold warrants to JPMorgan that would pay off if their "strike price" were below Tesla's share price upon the warrants' expiration in June and July 2021, according to Reuters.
JPMorgan, which said it had authority to adjust the strike price, said it substantially reduced the strike price after Musk's August 7, 2018 tweet that he might take Tesla private at $420 per share and had "funding secured," and reversed some of the reduction when Musk abandoned the idea 17 days later, the report said.
But Tesla's share price rose approximately 10-fold by the time the warrants expired, and JPMorgan said this required Tesla under its contract to deliver shares of its stock or cash. The bank said Tesla's failure to do that amounted to a default, Reuters said.
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