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JPMorgan sues Tesla for $162 million over warrants, Musk tweets
Published by maria gbaf
Posted on November 16, 2021
2 min readLast updated: January 28, 2026
Global Banking & Finance Review®
Company
Published by maria gbaf
Posted on November 16, 2021
2 min readLast updated: January 28, 2026
JPMorgan sues Tesla for $162M, claiming breach of contract over stock warrants after Tesla's share price surged. Musk's tweets influenced the situation.
By Jonathan Stempel
NEW YORK (Reuters) -JPMorgan Chase & Co on Monday sued Tesla Inc for $162.2 million, accusing Elon Musk’s electric car company of “flagrantly” breaching a contract related to stock warrants after its share price soared.
According to the complaint filed in Manhattan federal court, 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.
JPMorgan, which said it had authority to adjust the strike price, said it substantially reduced the strike price after Musk’s Aug. 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.
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.
“Though JPMorgan’s adjustments were appropriate and contractually required,” the complaint said, “Tesla has flagrantly ignored its clear contractual obligation to pay JPMorgan in full.”
Tesla did not immediately respond to requests for comment after market hours.
According to the complaint, Tesla sold the warrants to reduce potential stock dilution from a separate convertible bond sale and to lower its federal income taxes.
JPMorgan said it had been contractually entitled to adjust the warrants’ terms following “significant corporate transactions involving Tesla.”
The automaker in February 2019 complained that the bank’s adjustments were “an opportunistic attempt to take advantage of changes in volatility in Tesla’s stock,” but did not challenge the underlying calculations, JPMorgan said.
Musk’s tweets led to U.S. Securities and Exchange Commission civil charges and $20 million fines against both him and Tesla.
(Reporting by Jonathan Stempel in New York; Editing by Chris Reese and Cynthia Osterman)
The main topic is JPMorgan's lawsuit against Tesla for $162 million over a breach of contract related to stock warrants.
JPMorgan claims Tesla breached a contract by not delivering shares or cash after stock warrants expired, following a significant rise in share price.
Musk's 2018 tweet about taking Tesla private led to adjustments in the strike price of the warrants, impacting the contract terms.
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