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

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California-based Tesla has not made any comment about the lawsuits, neither has Mr Musk.

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 auto company private. 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 Twitter comments could potentially affect Musk's legal situation.

Musk announced on Twitter earlier this week that he was considering taking the electric carmaker private at a share price of $420 (£328.86) and total market value of $72bn, adding that he had already secured the necessary funding.

The stock has since retreated, in part following reports that the U.S. Securities and Exchange Commission had begun inquiring about Musk's activity.

Musk's attitude toward short sellers could be relevant, securities law experts have said.

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)".

The class includes investors who bought Tesla shares as they were rising in the wake of Musk's tweet. "What are your fav short shorts?" Interestingly, Elon Musk has openly criticised the short-sellers through his tweets. 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.

Musk also said, with characteristic Kanye West arrogance, that the Tesla stock is "the most shorted stock in the history of the stock market" and that, as it is publicly traded, "there are large numbers of people who have the incentive to attack the company". If there is evidence that the financing wasn't fully locked down, Musk's claim would expose him to allegations of fraud, Coffee said.