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

Tesla's board might not know where Elon's 'secure' funding is coming from

Tesla declined to comment for this story.

Chief Executive Elon Musk's buyout tweet last week: Why did Nasdaq let trading in Tesla shares continue for more than an hour afterward?

The complaint alleges violations of US securities law and was filed Friday as a class action in federal court in San Francisco. The remark set off a frenzy of trading in Tesla shares, even as investors were struggling to discern whether the tweet was legitimate and what precisely it meant. The board is said to be interested in that information, obviously, since funding must be secure if Elon's buyout, which could cost $70 billion, is to happen. That would allow the shorts to buy back the stock at a lower price, return the shares to the lender, and pocket the difference.

The decision to go private is mostly, based, Musk says, on the fact that his other company, SpaceX, is privately held and is operated more efficiently than Tesla, as it isn't subject to the ups and downs of the stock market.

FILE PHOTO: Tesla Motors Inc Chief Executive Elon Musk pauses during a news conference in Tokyo September 8, 2014.

The US Securities and Exchange Commission (SEC) regulator contacted Tesla to inquire whether Musk's statements were factual and why the disclosure was made on Twitter rather than in a regulatory filing, according to media reports.

Chamberlain said Musk and Tesla "artificially drove the price of Tesla shares up as much as $45.47 from their August 6, 2018 closing price ($341.99)".

Short-sellers of Tesla's stock have faced increasing aggression from Musk over recent months, with the billionaire citing the lack of market support as one of the main reasons he wants to take the company private.

According to the complaint, Isaacs bought 3,000 Tesla shares on August 8 to cover his short position, or bet that the price would decline, in the company.

The proposed class period in Isaacs' lawsuit runs from the afternoon of Aug. 7 through the next day, and in Chamberlain's lawsuit runs from Aug. 7 to Aug. 10.

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