Economy

Investors sue Tesla's Musk over go-private tweets

Investors sue Tesla's Musk over go-private tweets

Tesla and Chief Executive Elon Musk were sued twice on Friday by investors who said they fraudulently engineered a scheme to squeeze short-sellers, including through Musk's proposal to take the electric vehicle company private.

Musk announced on Twitter earlier this week that he was considering taking the electric carmaker private at a share price of $420 (£328.86) and total market value of $72bn, adding that he had already secured the necessary funding.

Musk, often the center of controversy, did not prove he had the funds to finance the operation - despite tweeting "funding secured".

The proposed class-action complaint filed by Kalman Isaacs in San Francisco federal court accused Tesla and Musk of trying to artificially manipulate the company's stock price.

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 two separate cases have been filed in a court in the Northern District of California, which is not far from where Tesla is located, Palo Alto.

Rand Paul says he delivered Trump letter to Putin
He says the letter emphasized the importance of working together on counter-terrorism, legislative talks and cultural exchanges. In addition to tensions over election meddling, the two countries are also at odds over Syria and Ukraine.

Short-sellers make a profit by borrowing overpriced shares, selling them and then buying them back at what they hope will be a lower price. Another, filed by William Chamberlain, seeks class action for those who bought or sold Tesla stock between August 7 and 10.

Musk's tweets helped push Tesla's stock price more than 13 percent above the previous day's close.

The US Securities and Exchange Commission (SEC) regulator contacted Tesla to inquire whether Musk's statements were factual and why the disclosure was made on Twitter rather than in a regulatory filing, according to media reports.

Tesla's share price edged higher as markets closed late last night, increasing 0.86 per cent to $355.49.

According to his complaint, Isaacs bought 3,000 Tesla shares on August 8 to cover his short position.


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