Tesla’s (NASDAQ:TSLA) CEO, Elon Musk Sued For Fraud
Friday, Tesla Inc (NASDAQ:TSLA) and its CEL, Elon Musk were sued by an investor who said they fraudulently engineered a scheme to “completely decimate” short-sellers, through Mr. Musk’s proposal to take the EV company private.
Short-sellers borrow shares they believe are overpriced, sell them, and then repurchase shares later at what they hope will be a lower price to make a profit.
Such investors have long been an irritant for Mr. Musk, who has sometimes used Twitter to criticize them.
Mr. Musk’s 7 August Tweets, including when he said “funding secured” for the ‘420’ buyout to possibly take Tesla private, helped push Tesla’s stock price more than 13% above the prior day’s close.
The stock has since given back about 70% of that gain, in part following reports that the US Securities and Exchange Commission had begun inquiring about Mr. Musk’s activity.
Mr. Musk has not offered evidence that he has lined up the necessary ‘420’ funding to take Tesla private, and the complaint did not offer proof to the contrary.
But Mr. Isaacs said Tesla’s and Mr. Musk’s conduct caused the volatility that cost short-sellers hundreds of millions of dollars from having to cover their short positions, and caused all Tesla securities purchasers to pay artificially inflated prices.
Tesla’s market value exceeds $70-B not including debt, and Mr. Musk had Tweeted that Tesla could go private for 420/share.
According to the complaint, Mr. Isaacs bought 3,000 Tesla shares on 8 August to cover his short position. The proposed class period begins on the afternoon of 7 August and ends the next day.
The case is Isaacs v Musk et al, U.S. District Court, Northern District of California, No. 18-04865.
|HeffX-LTN Analysis for TSLA:||Overall||Short||Intermediate||Long|
|Neutral (0.08)||Neutral (0.07)||Neutral (0.15)||Neutral (0.03)|
Have a terrific weekend.
Latest posts by Paul Ebeling (see all)
- US Economy Must Grow Faster Than the Federal Debt, President Trump is Correct - November 14, 2019
- Gold Technical Analysis: Buy Stops Over 1461.30 May Trigger Move into 1471.00 Fibo Mark - November 14, 2019
- The Street’s Key Stock Analysts Research Reports - November 14, 2019