(CNN Business) JPMorgan wants Tesla to pay $162.2 million in a lawsuit accusing CEO Elon Musk of violating a contract involving the company’s stock warrants.
The warrants relate to a 2014 transaction, in which JPMorgan was to profit if the strike price of Tesla stock remained below the EV maker’s price at their expiration in July and July this year.
JPMorgan alleges that following Musk’s tweet in August 2018 that he had secured funding to take Tesla private at $420 per share, it substantially reduced the strike price. The bank says it reversed the reduction after Musk shelved the proposed move in seventeen days.
The US bank says that Tesla has defaulted on delivering shares of its stock or cash after the price increased about ten times at the expiration of the warrants. The bank says Tesla sold the warrants to cut federal income taxes and avoid possible stock dilution due to the sale of a convertible bond.
JPMorgan challenges a February 2019 assertion by Tesla that the bank made the adjustments to take advantage of the EV maker’s stock volatilities. The bank says the adjustments were contractually required.
TSLA: NASDAQ is down -0.85% on premarket, JPM: NYSE is up +0.23% on premarket.
