Class-Action Lawsuit Filed Against Tesla After Elon Musk's Tweet

Enlarge  Musk

He hasn't supplied evidence that it was; nor has anyone else.

Securities laws forbid market manipulation by corporate leaders who announce pending stock purchases or sales when they have no intention or no means of carrying them out. In the days following Musk's tweet, Tesla stock tumbled back down to around $353 per share.

Musk, often the center of controversy, did not prove he had the funds to finance the operation - despite tweeting "funding 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" created to "completely decimate" short-sellers.

The two lawsuits filed by Isaacs and William Chamberlain on Friday alleged that Musk and Tesla's behaviour following the tweets violated USA securities law, and artificially inflated the company's share price.

It's unclear whether Saudi Arabia's sovereign wealth fund, which is said to have built less than a five per cent stake in Tesla, has agreed to commit money to the transaction, CNBC said.

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

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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. "There's this huge culture of these securities plaintiffs' firms", Sjostrom told Ars on Wednesday-before Isaacs' lawsuit was filed.

Tesla has yet to make a public statement on the matter. After adjusting for inflation, that's more than the record-setting buyout of RJR Nabisco that closed in 1989.

Musk had raised the go-private possibility with the board last week, according to a statement from six of Tesla's nine directors.

"Perhaps he has a few anchor investors and assumes they will work to find more capital", said Nicholas Colas, co-founder of DataTrek research.

Einhorn revealed the losses to his investors in Greenlight's letter while questioning Tesla investors, saying shareholders seemed to be backing the long-term growth of the company while Tesla appears to be focusing on "very short-term goals".

Kalman Isaacs, one of the investors who filed suit Friday in a San Francisco court, claimed Musk's tweets were "designed to completely decimate short-sellers".

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