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Lawsuits Claim Tesla CEO of Fraud in Buyout Tweets
Two investor lawsuits filed on Friday claim Tesla Inc. CEO Elon Musk made false and misleading statements about taking the company private in a deliberate effort to hurt short-sellers.
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Two investor lawsuits filed on Friday claim Tesla Inc. CEO Elon Musk made false and misleading statements about taking the company private in a deliberate effort to hurt short-sellers.
Last Tuesday Musk announced in a nine-word tweet that funding had been secured in a $72 billion plan to delist Tesla that valued the company’s stock at $420 per share. The statement prompted a brief 11% jump in Tesla’s share price to $380. The stock closed at $355 on Friday.
Short-sellers seek to make a profit by buying a company’s shares, then immediately selling them with a promise to reacquire the shares later at what they bet will be a lower price. The complaints allege that Musk artificially inflated Tesla’s share price in violation of U.S. securities laws. Musk has frequently clashed with short-sellers.
The lawsuits complain the short-sellers had to spend hundreds of millions of dollars to cover their short positions after Musk’s announcement.
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