Tesla and Elon Musk hit by fresh lawsuits over stock rigging claims


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 auto company's stock price, starting with Musk's August 7 tweet that he might take Tesla private. "Because Musk has not secured financing, and has issued false and materially misleading information into the market, short sellers of Tesla stock were forced to cover their positions by purchasing shares at artificially inflated prices after 12:48pm on August 7, 2018". Tesla shares are now up just 3.6 percent from where they traded prior to Muck's tweet and are 16.1 percent below the reported $420 takeover price.

"Ask TSLA to show you the agreement (s) signed by their funding source (s) by 5 pm EST that demonstrates funding is "secured" and 'certain, '" he wrote, using the company's ticker symbol.

James Cox, a professor of securities law at Duke University, downplayed the significance of the Friday tweets, noting that Musk's antipathy toward short sellers is well-known.

The fact that Musk met with SoftBank Chairman Masayoshi Son late previous year but the meeting didn't yield anything is not an indication that the Japanese multinational holding conglomerate isn't interested now that Tesla is committed to being profitable for the next two quarters.

William Chamberlain, another investor, also filed suit with accusations of artificial inflation. In the days following Musk's tweet, Tesla stock tumbled back down to around $353 per share.

The U.S. Securities and Exchange Commission is looking into whether Musk's tweet was based on facts and is scrutinizing Tesla's public announcements after the comments, reports Bloomberg.

In a blog post, he said going private would liberate the company from the quarterly reporting cycle, allowing it to be "free from as much distraction and short-term thinking as possible".

Musk and Tesla have yet to comment on the lawsuit, which was filed as a securities-fraud class action in federal court in San Francisco on Friday.

Short-sellers racked up paper losses of $1.3 billion on Tuesday after Tesla shares rallied 11 percent.

"Short shorts coming soon to Tesla merch", Musk tweeted. However, Isaacs lost money on his deal.

The two lawsuits filed by Isaacs and William Chamberlain on Friday alleged that Musk and Tesla's behaviour following the tweets violated United States securities law, and artificially inflated the company's share price. Tesla loses $2 billion in stock market value.