- Elon Musk, Tesla Dragged to Court
The Chief Executive Officer of Tesla, Elon Musk, on August 7th announced his plan to take the car company private in a proposal valuing the company’s share at $420. Musk further stated, in a tweet, that the funding for the deal had been secured.
However, the outspoken CEO and Tesla were quickly dragged to court following the tweets as he was accused of embarking on a scheme to prop up the value of Tesla’s stock at the expense of short sellers.
Musk and Tesla “embarked on a scheme and course of conduct to artificially manipulate the price of Tesla stock to completely decimate the Company’s short-sellers,” said Kalman Issacs, who sued the company in federal court in San Francisco.
The complaint stated that the series of tweets about the proposed deal drove shares of Tesla up by $45.47 from the previous day’s closing price. The lawsuit also claimed the CEO falsely stated that the fund for the deal has been secured.
In another class-action lawsuit filed by Plaintiff William Chamberlain in federal court in San Francisco, Musk and Tesla were accused of misleading investors between August 7 and August 10 on plans to take the company private, including falsely claiming investor support for the proposed deal was confirmed, and that funding was secured.
According to The Wall Street Journal, the Security and Exchange Commission has spoken to the company about Musk’s tweets, demanding the reason for those tweets when funding has not been secured.
Tesla’s board of investors are meeting this week to discuss plans to take the company private.
