The US biggest bank, JP Morgan, has sued electric car company, Tesla, for breaching a contractual agreement that involves stock warrant.
The complaint filed in a US federal court indicated that in 2014, JP Morgan bought warrant from Tesla with an agreement that Tesla would pay off if their strike price were below Tesla’s share price upon the warrant’s expiration in June – July 2021.
JPMorgan claims that it had the authority to adjust the strike price, which it did by substantially reducing 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 weeks later.
The warrant is expired now and Tesla has shorted the bank what it’s due. Tesla has refused to settle at the contractual strike price and pay in full what it owes to JPMorgan. An action that has prompted the bank to seek redress in the courts.
