In 2018, before Elon Musk was making headlines for his role in running Twitter, he was making headlines for another Twitter-related controversy: allegedly using the platform to commit fraud.
Back then, a series of tweets about a possible $72-billion Tesla buyout that never materialized got Musk, the electric vehicle maker's CEO, in trouble with the U.S. Securities and Exchange Commission. The SEC said the billionaire knew a deal wasn't on the horizon.
Now, a civil trial stemming from those tweets is being watched as a window into Musk's behavior, past and present, which means the trial could produce new controversies of its own.
The trial starts Tuesday in San Francisco with jury selection. Here's what else you need to know.
First, a quick refresher on what happened with the buyout tweets
On August 7, 2018, Musk tweeted that he had secured the funding needed to pay for a potential buyout of Tesla at $420 per share. He tweeted again on the same day, implying that the move was imminent: The "only reason" why the move was not certain is because it's contingent upon a shareholder vote, he said.
But the buyout never happened.
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After a week-long roller coaster in Tesla's stock price, the company said it didn't have the funding secured after all. Musk said it was feedback from shareholders that made him change his mind about the deal.
An investigation by the SEC commission led to a settlement with the company, which included a $40 million fine, split evenly between Tesla and Musk, and Musk's relinquishment of his chairman role for at least three years.
The SEC also said then that Musk wasn't even close to locking up the billions needed to pull off the buyout he teased on Twitter.
Musk has since said that he really believed he had the funding and that he entered into the SEC agreement under duress.
What's the deal with this trial?
The trial stems from a class-action lawsuit brought by investors who owned Tesla stock during a 10-day period (Aug. 7-17) that began the same day as Musk's tweets.
District Judge Edward Chen has already ruled that Musk's initial tweets were knowingly false and misleading. A jury will now decide whether Musk acted recklessly by posting them, as well as whether he caused financial harm to Tesla shareholders.
Tesla's stock prices swung by roughly $14 billion during the 10-day period covered in the lawsuit, the shareholders say.
What's happened to Tesla stock since the 2018 drama?
The August 2018 shareholder loss wasn't sustained for long: When adjusting for two stock splits, Tesla's shares are now worth roughly six times more than their 2018 values.
Still, recent investors have also lost a lot more than the $14 billion at the heart of the case. After a meteoric rise, Tesla shares started to plummet last year.
It lost 65% of its value in 2022 alone, a dip partly due to a tough year for the overall automobile industry and partly because of widespread disapproval of Musk's Twitter takeover.
Musk himself has broken the record for the most amount of money lost by one person in the shortest amount of time, according to Guinness World Records.
His fortune went from an estimated $320 billion in 2021 to its current level of roughly $147 billion, though he's still one of the richest people in the world.
What's at stake for Musk?
The CEO could lose another chunk of change after this trial, depending on its outcome. The shareholders say Musk should pay damages for the financial risk he put them in.
And while Tesla's stock price isn't directly on the line in this case, it could be swayed by another factor at stake: Musk's reputation.
At a time when shareholders are losing faith in Musk, we're likely to learn a thing or two about his management style from a witness lineup that includes top Tesla executives and Silicon Valley stars such as Oracle co-founder Larry Ellison, according to The Associated Press.
The trial has already turned into a bit of a referendum on Musk's likeability.
Last week, Judge Chen rejected the billionaire's bid to transfer the trial to Texas, which has been the site of Tesla headquarters since 2021.
Musk's lawyers said that he wouldn't get a fair trial in San Francisco due to the jury pool's probable biases against Musk related to his Twitter takeover, which included laying off over 3,750 employees.
The judge sided with the shareholders' lawyers, who said Musk had only himself to blame for any negative perceptions.
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