JPMorgan Chase & Co. agreed to drop a lawsuit filed by it Tesla Inc. was seeking $162 million in stock warrant transactions three years ago.
The move to end the lawsuit was announced Friday by both sides in a one-page court filing that dropped their counterclaims without the ability to refile. No consent agreement has been disclosed.
“JPMorgan and Tesla have decided to enter into a new commercial relationship and resolve outstanding disputes between the companies,” a bank spokeswoman said in an emailed statement on Saturday. “It’s a good result for everyone and we look forward to working together.”
In Elon Musk’s 2021 lawsuit against the electric vehicle maker, JPMorgan said it was owed Tesla shares worth the amount it sought, based on a 2014 settlement. Under that agreement, if the stock traded above a certain price, Tesla would owe JPMorgan a payment in either stock or cash.
The transaction was designed to help the automaker mitigate the risk of diluting its stock by issuing convertible notes and taking some federal income tax deductions. according to the suit.
But an August 2018 tweet from Musk complicated the deal, the bank said in its lawsuit. In the now-famous tweet, Tesla’s CEO said he was considering taking the company private for $420 per share and had “guaranteed financing.”
JPMorgan said it had discretion to adjust the warrants’ strike price to include the volatility of Tesla’s stock. He made adjustments after the tweet and when Musk dropped the issue.
Tesla then filed its claims that JPMorgan took advantage of the tweet to reduce the strike price of more than 1.9 million warrants. He called the bank’s lawsuit a bad faith breach of their agreement and a “cynical” attempt to profit from the deal.
Tesla and its attorneys did not immediately respond to requests for comment Friday to withdraw claims from the filing.
The filing follows a ruling against JPMorgan in September by the Manhattan federal judge overseeing the case. In the ruling, U.S. District Judge Paul Gardephe denied the bank’s request for a pretrial ruling in favor of its breach of contract claims and against Tesla’s claims.
The case is JPMorgan Chase Bank v. Tesla Inc., 21-cv-9441, is the U.S. District Court, Southern District of New York (Manhattan).
