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

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

Tesla Inc and Chief Executive Elon Musk were sued on Friday by an investor who said they committed securities fraud in a scheme to "completely decimate" short-sellers that included Musk's proposal to take the electric vehicle company private.

The two lawsuits filed by Isaacs and William Chamberlain on Friday alleged that Musk and Tesla's behaviour following the tweets violated U.S. securities law, and artificially inflated the company's share price. On Friday, stock trader Kalman Isaacs filed a class-action lawsuit - arguing that Elon Musk's tweets on Tuesday constituted securities fraud., according to ArsTechnica. In their lawsuits, they have said that through his tweets, Musk has helped in inflating the share price artificially.

But none of the six major U.S. banks has offered to lend the necessary amount to Musk, and they learned about the plans on Twitter with the rest of the public, several banking sources told AFP. The one thing he really doesn't like is the "negative propaganda" from short-sellers.

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

Tesla CEO Elon Musk used Twitter late Friday to taunt investors who have bet against his company, even though his previous Twitter comments have spurred a government investigation and shareholder lawsuits. In the days following Musk's tweet, Tesla stock tumbled back down to around $353 per share.

Tesla's Board of Directors has now indicated that it will meet with financial advisors during the week of August 13 to come up with a formal process to evaluate Musk's proposal to take the company private by offering $420 a share to existing shareholders.

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"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. William Sjostrom, an expert on securities law at the University of Arizona. says this is a common tactic in securities legislation. Sjostrom said that "firms are geared up to file suits immediately", often using "cookie-cutter complaints".

Irons has a small position in out-of-the money put options on Tesla that make money if the stock declines. Globally, that distinction goes to Alibaba, the Chinese e-commerce group with American Depositary receipts traded on the New York Stock Exchange.

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