Investors sue Tesla's Musk over go-private tweets

Enlarge  Musk

Enlarge Musk

Musk has frequently complained about short interest dynamics as it pertains to his company and lamented Tuesday about the fact that Tesla is often the most shorted company on Wall Street.

The number of Tesla Inc (TSLA.O) shares sold short has rebounded and are now higher than before CEO Elon Musk proposed on Tuesday taking the electric auto maker private, according to data from financial technology and analytics firm S3 Partners.

Since telling his followers he has "funding secured" for the deal, the U.S. Securities and Exchange Commission has requested more information and Tesla's board of directors is expected to ask Musk to recuse himself as it reviews his take-private proposal.

Two new lawsuits accuse Musk and Tesla of violating federal securities law by allegedly making false statements to boost the company's stock price.

United States market regulators are reportedly stepping up their scrutiny of Musk's claim and have asked Tesla if the CEO's remarks were genuine. This move follows reports that the SEC is looking into his tweets.

Tesla has yet to comment on the lawsuits.

"Am considering taking Tesla private at $420". He said he had to buy around 3,000 Tesla shares on Wednesday, the day after Musk's tweets, to limit his losses. Musk and SoftBank Group's Masayoshi Son held talks a year ago that touched on taking Tesla private, two people with knowledge of the discussions have said. "Funding secured", Musk said on Tuesday via Twitter before issuing a formal statement on Tesla's website. They said he had "addressed the funding for this to occur", without providing details.

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 artificially inflated prices.

The agency would be able to answer those questions relatively quickly, but its second potential area of inquiry - Musk's intent with his tweets - would be more challenging, Pitt said. There is no evidence posted by either Elon or Tesla related to the secured finance.

Some analysts have suggested that Musk could convince Tesla's top shareholders, such as Fidelity Investments and China's Tencent, to roll their equity stakes into the deal, thereby significantly reducing the amount of money needed to be raised. The action was filed in the Northern District of California and is captioned Kalman Isaacs v. Elon Musk, et al.

Musk, who envisions sending tourists to the Moon and slashing travel times between major cities with advanced trains, is respected in Silicon Valley, where he could tap venture capital.

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