Tech

Musk sued over plan to take Tesla private

Elon Musk and his electric car firm Tesla are being sued by investors who accuse them of concocting a scheme to "completely decimate" short-sellers.

The two lawsuits were filed three days after Mr Musk announced on Twitter that planned to take Tesla private in a record $72bn (£56bn) transaction.

The billionaire claimed funding had been "secured" for a deal which would value the firm at a price of $420 (£328) per share – more than double Apple's current value ($207 per share).

Am considering taking Tesla private at $420. Funding secured.

— Elon Musk (@elonmusk) August 7, 2018

He then answered a number of questions from some of his 22.3 million followers, reiterating these points.

One plaintiff Kalman Isaacs said the tweets were false, misleading and they amounted to a "nuclear attack" designed to "completely decimate" short-sellers.

Mr Isaacs and the second plaintiff, William Chamberlain, have alleged that Tesla's stock price was artificially inflated and federal securities laws had been breached.

No evidence has been presented by either side to prove or disprove that funding had been secured to take the company private.

:: Has Musk got the money to take Tesla private?

Short-sellers make a profit by borrowing overpriced shares, selling them and then buying them back at what they hope will be a lower price.

Tesla shares rose 13% after the Tesla announcement but the company's stock has since given up two-thirds of that gain.

The US Securities and Exchange Commission is understood to have already opened an inquiry into Mr Musk's tweets.

The Wall Street regulator is reported to have asked Tesla why plans to go private were disclosed on the social media platform rather than in an official filing.

Mr Isaacs said he had bought 3,000 Tesla shares on 8 August to cover his short position.

But he added that the conduct of Tesla and its chief executive Mr Musk had caused volatility and cost short-sellers hundreds of millions of dollars.

More from Elon Musk

It had also caused Tesla securities buyers to pay inflated prices, he claimed.

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

Original Article

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