Tesla's share price tumbled 12% in after-hours trading after the announcement of the lawsuit, which could potentially see Musk landed with a substantial fine and even removed from his position as the head of Tesla - or any publicly traded organization.
A few days earlier in an email to Tesla's board of directors and CFO, Musk said the $420 price was based on a 20 per cent premium over that day's closing share price, "because he thought 20 per cent was a "standard premium" in going-private transactions".
On Aug. 13 - almost a week after the initial tweets - a post on Tesla's blog attributed to Musk appeared to walk back his earlier statements, saying Musk had had the impression there was "no question" that a deal could be closed to take the company private. He specifically said he would consider doing so at $420, adding that funding had already been secured.
"I have always taken action in the best interests of truth, transparency and investors", Musk said.
As it stands, Musk's future with Tesla remains unclear. Musk has blamed short-sellers, investors betting on a collapse in a company's share price, for Tesla's woes. "Integrity is the most important value in my life and the facts will show Inever compromised this in any way", the statement said.
Musk has at least two other ongoing lawsuits; one filed by a British cave diver he called a "pedo" and another by various shareholders who claim that the above-mentioned Tweet was a method of defrauding investors.
Musk called off his plans to take Tesla private on August 24.
'We are concerned that decreased confidence in Tesla on the part of investors may impact the company's ability to raise capital on amenable terms, ' Brinkman said.
The board too issued a statement in support of Musk, saying it was "fully confident in Elon, his integrity and his leadership of the company".
"I think it was a big mistake to turn down the settlement offer", CFRA analyst Garrett Nelson said.