- JPMorgan held Tesla warrants that would pay if their strike price were below the EV-maker's share price upon expiration.
- The bank adjusted the strike price after Tesla CEO Elon Musk tweeted that he was considering taking the company private in 2018.
- JPMorgan said it had contractual rights to make the adjustments. Tesla said they were opportunistic.
JPMorgan Chase has sued Tesla for $162 million, alleging the electric carmaker "flagrantly" breached a contract related to stock warrants.
According to the November 15 filing, Tesla sold warrants to JPMorgan that would pay off if their strike price were below the EV-maker's share price upon the warrants' expiration.
JPMorgan adjusted the strike price after CEO Elon Musk tweeted in August 2018 that he might take Tesla private at $420 a share and had "funding secured." JPMorgan said in the filing it made the adjustment as Musk's tweet caused "immediate and significant economic effects as the market attempted to price in the likelihood of Tesla going private."
JPMorgan adjusted the strike price again when Tesla abandoned the plan to take the company private. It had contractual rights to make the adjustments, the bank said in the filing.
The warrants had expiration dates ranging from June 1, 2021, to July 27, 2021. When the warrants expired, Tesla's share price had risen to levels "well above both the original and adjusted strike prices," requiring Tesla to contractually deliver shares of its stock or cash, said JPMorgan in the filing.
"Even though JPMorgan's adjustments were appropriate and contractually required, Tesla has refused to settle at the contractual strike price and pay in full what it owes to JPMorgan. Tesla is in flagrant breach of its contractual obligations," the bank said in the filing.
Tesla said in February 2019 that JPMorgan's adjustments were "unreasonably swift and an opportunistic attempt to take advantage of changes in volatility in Tesla's stock," according to the filing.
Tesla did not immediately respond to Insider's request for comment on the latest lawsuit.