Tesla and Elon Musk hit by fresh lawsuits over stock rigging claims
Tesla and its billionaire chief Elon Musk were hit by two new lawsuits yesterday, over claims that Musk's surprise proposal to take the company private was scheme designed to target short-sellers of Tesla stock.
Musk announced on Twitter earlier this week that he was considering taking the electric carmaker private at a share price of $420 (£328.86) and total market value of $72bn, adding that he had already secured the necessary funding.
One lawsuit, filed by Tesla investor Kalman Isaacs, said Musk's tweets amounted to a "nuclear attack" on short-sellers, designed to "completely decimate" them for not believing in Tesla's stock to date.
On Wednesday, several members of Tesla's board issued a statement to say they had been informed of Musk's intentions a week before the news was made public. Others, however, stayed silent as they have yet to see more detailed financial evidence from Musk.
The two lawsuits filed by Isaacs and William Chamberlain on Friday alleged that Musk and Tesla's behaviour following the tweets violated US securities law, and artificially inflated the company's share price.
Tesla has yet to make a public statement on the matter.
Musk's tweets on Tuesday temporarily caused Tesla's share price to surge more than 13 per cent, having since crashed back down by two-thirds of that gain after the US Securities and Exchange Commission began an inquiry into Musk's activity.
Isaacs claims that Tesla's volatility on Wall Street after the Twitter storm has cost shareholders shorting the stock hundreds of millions of dollars, and caused all Tesla securities purchasers to pay inflated prices over the three-day period leading up to Friday 10 August.
Short-sellers of Tesla's stock have faced increasing aggression from Musk over recent months, with the billionaire citing the lack of market support as one of the main reasons he wants to take the company private.
Tesla's share price edged higher as markets closed late last night, increasing 0.86 per cent to $355.49.