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

[rooster59]

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

By Jonathan Stempel

 

FILE PHOTO: Elon Musk, founder, CEO and lead designer at SpaceX and co-founder of Tesla, speaks at the International Space Station Research and Development Conference in Washington, U.S., July 19, 2017. REUTERS/Aaron P. Bernstein/File Photo

 

(Reuters) - Tesla Inc 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 car company private.

 

The lawsuits were filed three days after Musk stunned investors by announcing on Twitter that he might take Tesla private in a record $72 billion transaction that valued the company at $420 per share, and that "funding" had been "secured."

 

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" designed to "completely decimate" short-sellers.

 

The lawsuits filed by Isaacs and William Chamberlain said Musk's and Tesla's conduct artificially inflated Tesla's stock price and violated federal securities laws.

 

Tesla did not respond to a request for comment on the proposed class-action complaints filed in the federal court in San Francisco. The company is based in nearby Palo Alto, California.

 

Short-sellers borrow shares they believe are overpriced, sell them, and then repurchase shares later at what they hope will be a lower price to make a profit.

 

Such investors have long been an irritant for Musk, who has sometimes used Twitter to criticize them.

 

Musk's Aug. 7 tweets helped push Tesla's stock price more than 13 percent above the prior day's close.

 

The stock has since given back more than two-thirds of that gain, in part following reports that the U.S. Securities and Exchange Commission had begun inquiring about Musk's activity.

 

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.

 

But Isaacs said Tesla's and Musk's conduct caused the volatility that cost short-sellers hundreds of millions of dollars from having to cover their short positions, and caused all Tesla securities purchasers to pay inflated prices.

 

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

 

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

 

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.

 

The cases are Isaacs v Musk et al, U.S. District Court, Northern District of California, No. 18-04865; and Chamberlain v Tesla Inc et al in the same court, No. 18-04876.

 

 

-- © Copyright Reuters 2018-08-11

[55Jay]

I was ideologically long on my modest TSLA holding but Elon's gone off the rails a bit too much this year (in particular) with all this Trumpian Twitter bulls**t.    Sold my shares the other night at $372.  Screw it.  ?

[from the home of CC]

Just shows there's a lot more at risk in trading than a company's performance. Hope this arrogant prick gets his just deserts.

[mtls2005]

Successful entrepreneurs are, more often than not, prickly human beings, and, maybe as a result of their 'vision and drive' are "jerks"? Edison being but a single example?

 

Short-sellers, I find, to be worse, but that's just me.

 

His comment about taking the company private seemed to me to be a bit close to the line, although most management always finds ways to improve their company's situation. If he was speaking to sovereign funds about taking Tesla private he probably should have kept that quiet until required by laws/regulations, and lawyerly advice, to make that plan public.

 

 

[Wake Up]

Short sellers and lawsuits.  Kiss my a$$ to both groups. 

[geriatrickid]

2 hours ago, Wake Up said:

Short sellers and lawsuits.  Kiss my a$$ to both groups. 

 

Parasites who contribute nothing.

[sirineou]

He did not say he would ,He said he "might" IMO a frivolous lawsuit , I expect there will be a successful motion to dismiss 

[janclaes47]

23 minutes ago, sirineou said:

He did not say he would ,He said he "might" IMO a frivolous lawsuit , I expect there will be a successful motion to dismiss 

He tweeted " funding secured " which was a lie.

 

The SEC is probing him also, and the latest is that his own shareholders may sue him.

 

This guy make Enron and Madoff look like amateurs