Thursday, 16 August, 2018

Lawsuits accuse Tesla's Musk of fraud over tweets, going-private proposal

Tesla's board might not know where Elon's 'secure' funding is coming from Investor sues Elon Musk and Tesla over price swings following 'go private' tweet
Nellie Chapman | 12 August, 2018, 18:26

Tesla CEO Elon Musk used Twitter late Friday to taunt investors who have bet against his company, even though his previous Twitter comments have spurred a government investigation and shareholder lawsuits.

Tesla Inc and its CEO Elon Musk were sued on Friday by an investor who said they defrauded shareholders in a scheme to manipulate the electric vehicle company's stock price, starting with Musk's August 7 tweet that he might take Tesla private.

It boosted Tesla's stock price immediately.

Such investors have always been an irritant for Musk, who has sometimes used Twitter to criticize them. But in the days since, it has lost most of those gains, reacting, at least in part, to reports from Bloomberg and the Wall Street Journal that the federal Securities and Exchange Commission is investigating Musk's claim.

Mr Isaacs said he had bought 3,000 Tesla shares on 8 August to cover his short position. Interestingly, Elon Musk has openly criticised the short-sellers through his tweets.

The proposed class period in Isaacs' lawsuit runs from the afternoon of Aug. 7 through the next day, and in Chamberlain's lawsuit runs from Aug. 7 to Aug. 10.

On Friday, two lawsuits were filed accusing Musk of seeking to harm short sellers by artificially running up the price of the company's shares through his Tuesday tweets.

He's accused them of manipulating the press by planting stories that paint Tesla in a bad light.

The decision to go private is mostly, based, Musk says, on the fact that his other company, SpaceX, is privately held and is operated more efficiently than Tesla, as it isn't subject to the ups and downs of the stock market.

In one of the lawsuits, the plaintiff Kalman Isaacs said Musk's tweets were false and misleading, and together with Tesla's failure to correct them amounted to a "nuclear attack" created to "completely decimate" short-sellers.

"The goal of the securities law is to provide the capital markets with accurate information, and people's motivation are really beside the point", Fisch said.