U.S. lender JPMorgan Chase (NYSE:JPM) announced on Friday that it would drop its lawsuit against Tesla (NASDAQ:TSLA), which accused the electric vehicle maker of “flagrantly” violating a 2014 contract related to stock warrants sold to the bank.
The decision was revealed in a joint one-page filing in a Manhattan court, where both companies agreed to dismiss their claims against each other.
Bloomberg News first reported the settlement earlier on Friday. Details of the settlement were not disclosed, and neither JPMorgan nor Tesla immediately responded to Reuters’ requests for comment.
The lawsuit, filed by JPMorgan in November 2021, sought $162.2 million in damages. The bank alleged that Tesla had breached the 2014 agreement concerning stock warrants, which JPMorgan claimed gained significant value following a controversial 2018 tweet from Tesla CEO Elon Musk.
Warrants allow the holder to purchase a company’s stock at a predetermined “strike” price on a specific date.
On August 7, 2018, Musk tweeted about potentially taking Tesla private at $420 per share with “funding secured,” followed by an announcement 17 days later that he was abandoning the plan. JPMorgan argued that these statements caused significant volatility in Tesla’s stock price. In response, the bank adjusted the strike price of the warrants to preserve their fair market value.
JPMorgan contended that these adjustments and Tesla’s subsequent 10-fold stock price increase obligated the company to make payments, which it had failed to do. In January 2023, Tesla countersued JPMorgan, accusing the bank of attempting to secure an unjust “windfall” by repricing the warrants.
Musk, who acquired Twitter for $44 billion in 2022, had previously agreed in a 2018 settlement with the U.S. Securities and Exchange Commission (SEC) to obtain pre-approval from a Tesla lawyer for certain tweets.
