Tesla CEO Musk taunts short sellers amid legal scrutiny

Marcus Newton
August 15, 2018

The investors had no choice but to file a case against the company after Elon Musk posted a tweet on Tuesday to announce that he going to take Tesla private.

"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. The lawsuit, first reported by Reuters, appears to be the first one claiming that Musk's Tuesday tweets violated federal securities law.

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 scribe also reached out to individuals close to 16 tech and financial institutions and they said that they were not aware of any pre-arranged funding for this transactions.

Tesla did not respond to a request for comment on the proposed class-action complaints filed in the federal court in San Francisco. In the class action lawsuit filed by Isaacs, he argues that Musk doesn't actually have funding secured. Rather, he had Tweeted to decimate the Company's short-sellers who were forced to cover their positions over the succeeding days at artificially inflated prices. In reaction to Musk's Tweet, the price of Tesla's stock soared to an intra-day high of $387.46, $45.47 above the previous day's closing price, closing at $379.57 per share. Musk and SoftBank Group's Masayoshi Son held talks previous year that touched on taking Tesla private, two people with knowledge of the discussions have said. They said he had "addressed the funding for this to occur", without providing details.

There's a nagging question on Wall Street after Tesla Inc.

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"Short-sellers will go away if he executes on his business plan and will grow in numbers if he doesn't", he said.

The Twitter comments could potentially affect Musk's legal situation.

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.

That's a hard charge to prove, Pitt said. For less severe penalties, the SEC would have to determine it was more likely than not that Musk committed some form of misconduct, Pitt said.

Some analysts have suggested that Mr. Musk may be able to 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.

Other reports by MaliBehiribAe

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