Published: Sat, August 11, 2018
Money | By Ralph Mccoy

Lawsuits accuse Tesla's Musk of fraud over tweets, proposal to go private

Lawsuits accuse Tesla's Musk of fraud over tweets, proposal to go private

Saudi Arabia's Public Investment Fund (PIF) has shown no interest so far in financing Tesla Inc (TSLA.O) CEO Elon Musk's proposed $72 billion deal to take the US electric vehicle maker private, despite acquiring a minority stake in the company this year, two sources familiar with the matter said. He then took to Twitter to mock them.

His lawsuit, and another filed by William Chamberlain, accuse Mr Musk and Tesla of violating federal securities laws and artificially inflating Tesla's share price.

The two separate cases have been filed in a court in the Northern District of California, which is not far from where Tesla is located, Palo Alto.

Musk's tweets helped push Tesla's stock price more than 13 percent above the previous day's close.

The tweet surprised many observers and drew criticism that it was not the best way for Musk to announce important decisions.

The complaint said the class period begins on the afternoon of August 7, when the defendants launched their "nuclear attack" on short-sellers, and ends the next day.

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Taking Tesla private would remove the pressure from Musk coming from hedge funds betting that the company's stock will drop given its production issues and negative cash flow. The US Securities and Trade Commission is now checking whether the tweet was factual, Bloomberg reported, citing its own sources.

Elon Musk has a long history of feuding with short-sellers.

The billionaire continued to openly mock the traders on Saturday. But a new report suggests that the question of funding might still be that - a question. They said the board is also evaluating this option. Deliberations are at an early stage and the company hasn't yet formally hired a bank to work on the process or made a final decision on how to proceed, they said.

Musk said he is thinking about pulling Tesla out of the stock market, citing "wild swings" in the company's stock price which can be "a major distraction for everyone working at Tesla".

The 47-year-old investor and engineer stunned financial markets on Tuesday when he said on Twitter that he was considering a take-private deal for Tesla, an auto manufacturing pioneer that developed the world's first luxury all-electric sedan vehicle. The main accusation against both is that they perpetrated a fraud on the shareholders of Tesla by misleading that the company is being turned into a privately held company. "My hope is for all shareholders to remain", Musk said.

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