JPMorgan Chase & Co. has agreed to dismiss a lawsuit it filed against Tesla Inc. three years ago seeking $162 million related to stock warrant transactions.
The decision to end the legal dispute was announced on Friday in a brief court filing by both parties, in which they dropped their claims against each other without the option to refile them. The details of any settlement agreement were not disclosed.
“JPMorgan and Tesla have chosen to establish a new commercial relationship and resolve the outstanding disputes between the companies,” a bank spokesperson stated in an email on Saturday. “This is a positive outcome for all parties involved and we are excited to collaborate in the future.”
In its 2021 lawsuit against Elon Musk’s electric vehicle company, JPMorgan contended that Tesla owed it shares equivalent to the amount it was seeking, based on a 2014 agreement. According to that agreement, if the stock exceeded a certain price, Tesla would owe JPMorgan a payment in shares or cash.
The transaction was intended to help the automaker minimize the risk of stock dilution from the issuance of convertible notes and to secure federal income tax deductions, as stated in the suit.
However, a tweet by Musk in August 2018 complicated the deal, the bank alleged. In the tweet, the Tesla CEO suggested taking the company private at $420 a share and claimed he had “funding secured.”
JPMorgan stated that it had the discretion to modify the warrant strike price based on factors including Tesla’s stock volatility. Adjustments were made following the tweet and when Musk abandoned the plan.
Tesla then filed its own claims accusing JPMorgan of exploiting the tweet to lower the strike price of over 1.9 million warrants. It criticized the bank’s lawsuit as a breach of their agreement in bad faith and a “cynical” effort to profit from the situation.
Tesla and its legal team did not immediately respond to requests for comment on Friday’s filing dismissing the claims.
The dismissal follows a ruling against JPMorgan in September by the Manhattan federal judge presiding over the case. In the ruling, US District Judge Paul Gardephe denied the bank’s request to rule in its favor on the breach-of-contract claims and against Tesla’s claims prior to trial.
The case is titled JPMorgan Chase Bank v. Tesla Inc., 21-cv-9441, US District Court, Southern District of New York (Manhattan).
