JPMorgan Chase (JPM.US) dismisses lawsuit against Tesla (TSLA.US) over warrants

Market IntelMonday, Dec 2, 2024 6:10 am ET

1min read

JPMorgan Chase (JPM.US) agreed to dismiss its lawsuit against Tesla (TSLA.US) last Friday, which alleged the electric vehicle maker "willfully" breached a contract related to the sale of warrants to the bank in 2014.

The two companies filed a court document in a Manhattan court to dismiss the lawsuit, which did not disclose the terms of the settlement. "JPMorgan and Tesla have decided to establish a new business relationship and resolve the outstanding disputes between them," a spokesperson for JPMorgan said in a statement. "This is a good outcome for everyone, and we look forward to working together."

JPMorgan sued Tesla in November 2021, seeking $1.62 billion, alleging the company violated a contract related to the sale of stock warrants in 2014. The bank argued the warrants became more valuable after a tweet from Tesla CEO Elon Musk in 2018.

Warrants give holders the right to buy shares of a company at a set "strike" price and date. JPMorgan said it adjusted the strike price in both instances "to maintain the same fair market value as it existed prior to the tweet." The bank said Tesla had to reprice the warrants after Musk's tweet and pay it based on a 10x increase in the stock price, but the company did not do so. Tesla counter-sued JPMorgan in January 2023, alleging the bank sought "excessive profits" in re-pricing the warrants.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.