Class-Action Lawsuit Filed Against Tesla After Elon Musk's Tweet

Elon Musk’s Tesla tweets are no longer scaring short sellers

Interestingly, Elon Musk has openly criticised the short-sellers through his tweets.

In a tweet, Elon Musk, the Tesla's CEO said that he was considering a private deal for Tesla and he had secured funding for the proposal, without providing details. So, even if Musk did post the tweet hoping to damage short sellers by boosting Tesla stock price, it wouldn't be illegal unless it were untrue, she said. That would allow the shorts to buy back the stock at a lower price, return the shares to the lender, and pocket the difference. His intention in taking the company private would be to protect Tesla from the distractions of share price volatility and pressure to meet quarterly financial targets, writes the BBC.

Cheddar has reached out to Tesla for comment. In particular, and importantly, at 12:48pm eastern standard time on August 7, 2018, Musk issued a statement via Twitter that "funding" for the deal had been "secured" ("Funding secured").

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".

On August 1, when Tesla stock was climbing after the company's quarterly earnings release, Musk said on Twitter that he would send one of Tesla's biggest short sellers, David Einhorn, president of hedge fund Greenlight Capital, a box of short shorts "to comfort him through this hard time", referring to Greenlight Capital's big quarterly loss... mainly due to Tesla's stock boom. "Anybody who purchased the stock on that news, if the news was in fact misleading, could have a claim, however, it would be very short class period".

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"The most striking feature of the quarter is that Elon Musk appears erratic and desperate", Einhorn's letter added.

Another complaint filed by William Chamberlain claims that Musk "violated federal securities laws and artificially inflated Tesla's share price", reports the BBC.

Tesla has yet to make a public statement on the matter.

The case is Isaacs v. Musk, 18-cv-04865, US District Court, Northern District of California (San Francisco).

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