The following is the [XGNews]: Musk responded to JPMorgan’s lawsuit with “final warning”: give bad comments if the lawsuit is not withdrawn recommended by xgapn.com.
According to foreign media reports, JPMorgan Chase, a famous American investment bank, sued Tesla last week, accusing the latter of violating the warrant agreement signed with it and claiming $162 million.
Elon Musk, chief executive of Tesla, responded to this on Monday local time, warning JPMorgan that if it did not withdraw the lawsuit, he would give a bad comment on the largest comment website in the United States.
Over the years, musk has had a bad relationship with Jamie Dimon, chief executive of JPMorgan Chase. Musk has always refused to cooperate with JPMorgan Chase led by Dimon and turned to other banks to expand Tesla and its entire business empire. According to people familiar with the matter, the dialogue between the two companies over the years often ends with one side feeling unhappy. Although musk and Damon tried to repair the relationship, there was always conflict. In the end, JPMorgan decided that it would be better without Tesla.
Last week, when JPMorgan sued Tesla, some details began to be made public in the silent dispute that led to the confrontation between America’s most valuable carmaker and the largest bank. JPMorgan said in the lawsuit that Tesla owed it $162 million in a deal it helped arrange in 2014. Often, bankers seek to avoid public disputes with large and even potential customers, fearing that they will lose contact.
However, JPMorgan said last week: “we have provided Tesla with multiple opportunities to fulfill its contractual obligations, but unfortunately, they forced this issue into litigation.” Musk replied: “if JPMorgan does not withdraw their litigation, I will give them a bad comment on yelp. This is my last warning!”
Musk and Damon both dominate their companies and industries. Both of them had public disputes with competitors or made sharp attacks on critics and regulators, but Dimon often regretted his admitted careless mistakes, while musk rarely gave in. Tesla seized the market’s optimism about the future of electric vehicles, became one of the first companies with a valuation of more than $1 trillion, and became the kind of customer that Wall Street competed for.
However, public records show that JPMorgan’s investment bankers have not participated in any Tesla issuance or transaction since 2016. Even if it participated in Tesla’s initial public offering (IPO) in 2010 and several capital market transactions in subsequent years, JPMorgan usually lags behind competitors such as Goldman Sachs and Morgan Stanley.
According to Dealogic, a global data processing company, Tesla paid JPMorgan about $15 million for consulting and capital market work in the past 10 years, while Goldman Sachs received about $90 million. Public documents show that musk mortgaged his shares to Morgan Stanley, Goldman Sachs and Bank of America in exchange for personal loans.
People familiar with the matter said that JPMorgan’s JPMorgan consumer bank is a large auto lender, but it is hesitant to become an early supporter of Tesla and other electric vehicles. Bankers are worried about the long-term value of electric vehicle batteries. Later, chase bank executives approached musk and hoped to reach an agreement to make chase bank the main lender of Tesla dealer buyers. The bank had similar deals with Maserati and Jaguar Land Rover, but the proposal was rejected by musk.
JPMorgan recently signed a similar agreement with rivian, a Tesla competitor and electric truck manufacturer. People familiar with the matter said that the bank has also been providing customers with more Tesla financing recently.
Last week’s lawsuit could exacerbate tensions between Tesla and JPMorgan Chase. Tesla’s attorney is Alex Spiro, who successfully defended musk in a libel lawsuit.
The core of the lawsuit is the warrants purchased by JPMorgan from Tesla, which are part of a series of transactions JPMorgan helped Tesla establish in 2014. If Tesla’s stock price is higher than the price agreed upon when the warrant expires in 2021, Tesla will have to pay JPMorgan in cash or stock. JPMorgan said that if Tesla announced that it was exploring a sale or other transaction, the contract allowed JPMorgan to change the strike price because it would affect the value of the warrants.
In 2018, musk said on twitter that he had obtained financial guarantee to privatize Tesla at the price of $420 per share. JPMorgan Chase said in the lawsuit that the move led to a reduction in the executive stock price, and therefore warned Tesla. When the two sides apparently failed to reach an agreement, JPMorgan raised the execution price again, but did not fully return to the originally agreed price.
The lawsuit said Tesla opposed this and told JPMorgan that its price adjustment was “too rapid” and “suspected of speculation”. Tesla also told JPMorgan that it was the only bank to make such adjustments. However, JPMorgan argued that other banks “may refuse to adjust their warrant price for commercial reasons, which has nothing to do with the contract terms or the rationality of JPMorgan’s adjustment”.
By the time the contract expires in June 2021, Tesla’s share price has soared, much higher than the original price or even the adjusted price originally agreed with JPMorgan. JPMorgan asked Tesla for payment, and Tesla paid JPMorgan according to the initial execution price. But the bank said Tesla refused to pay the additional amount required for the adjustment.
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