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ibusinesslines.com September 23, 2018


Tesla CEO Musk accused of defrauding shareholders, sued by investors

12 August 2018, 06:24 | Kelvin Horton

Investor sues Elon Musk and Tesla over price swings following 'go private' tweet

Tesla's board might not know where Elon's 'secure' funding is coming from

Well, Tesla is now a publicly traded company and Mr. Musk doesn't like this because being public, as he puts it, "subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term".

Elon Musk and his electric vehicle firm Tesla are being sued by investors who accuse them of concocting a scheme to "completely decimate" short-sellers.

The complaint alleges violations of American securities law and was filed on Friday as a class action in federal court in San Francisco. The remark set off a frenzy of trading in Tesla shares, even as investors were struggling to discern whether the tweet was legitimate and what precisely it meant.

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.

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.

On Tuesday, Musk said he could finance the buyout of Tesla, founded in 2003, at a large premium to current valuation, at a price of $420 a share.


The US Securities and Exchange Commission is understood to have already opened an inquiry into Mr Musk's tweets.

Musk has not offered evidence that he has lined up the necessary funding to take Tesla private, and the complaints did not offer proof to the contrary.

Tesla's market value exceeds $60 billion, and its shares closed Friday up $3.04 at $355.49.

One of the lawsuits, filed by shareholder Kalman Isaacs, seeks class action status on behalf of investors who bought Tesla stock on August 7 and August 8.

The complaint said the class period begins on the afternoon of August 7, when the defendants launched their "nuclear attack" on short-sellers, and ends the next day.



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