The precise element required for 10b5 fraud is scienter, which is a fancy word for intent. But it does NOT require true normal intent. A constructive intent concept is implemented in the concept of "reckless". A good discussion of this is at:
https://www.wsgr.com/PDFSearch/pleading_of_scienter.pdf
An element of any securities fraud claim is the defendant’s state of mind. In a claim brought under Rule 10b-5, the applicable question is whether the defendant acted with fraudulent intent (i.e., scienter) when he made the alleged false or misleading statement.
the Second Circuit ... concluded that ... conduct that is ‘“highly unreasonable’ and ‘an extreme departure from the standards of ordinary care . . . [such] that the danger was either known to the defendant or so obvious that the defendant must have been aware of it.’” was enough to prove recklessness and meet the scienter requirement.
For EM to defend himself he needs to show that the statements were true/not materially misleading OR that he wasn't reckless, i.e., he didn't depart from the standards of ordinary care such that he knew or should have known that his statements were misleading.
It's a close case that depends on the facts as to how much the funding was actually secured/committed/certain, and what other emails and texts did he write leaving a trail of how much care he took (or didn't take) to make sure his statements were accurate. Or whether there is any smoking gun evidence -- a text to a friend saying "this will show the shorts".
Lots of unknowns and uncertainty. A settlement where he could have stayed as a CEO -- basically an appropriate slap on the wrist for a relatively minor and victimless disclosure sloppiness -- was almost certainly better than taking the risks of this litigation.