Tesla CEO Musk accused of defrauding shareholders, sued by investors

14 August, 2018, 18:40 | Author: Kathy Ellis
  • Tesla's board might not know where Elon's 'secure' funding is coming from

Musk has also said he would be looking to keep his ownership of Tesla at around 20 per cent in a buyout deal, and that a special objective vehicle, like the one that exists at his aerospace company SpaceX, would allow Tesla shareholders to remain invested if they so choose.

On Tuesday, Musk tweeted that he was considering taking the electric vehicle company private and that he had secured funding, valuing the company at $420 a share.

The complaint alleges violations of American securities law and was filed on Friday as a class action in federal court in San Francisco.

They have cited as evidence Musk's tweet that came on August 7 and the very next day, Tesla shares went up by around 13%.

As of Thursday, 34.75 million Tesla shares were sold short, up from 34.67 million shares on Monday, S3 data showed.

June 21, 2016 - Tesla announces its plan to buy Solar City, a solar energy system company in which Musk holds a stake, for $2.9 billion.

Tesla declined to comment to both Reuters and Roadshow. Musk is Tesla's largest shareholder, with a 20% stake in the company.

Apparently, Musk had previous discussions with Softbank and the Saudi sovereign fund about taking Tesla private.

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Since telling his followers he has "funding secured" for the deal, the U.S. Securities and Exchange Commission has requested more information and Tesla's board of directors is expected to ask Musk to recuse himself as it reviews his take-private proposal.

Many investors place their faith in Tesla because they believe that it is leading the electric vehicle revolution alone.

Short-sellers racked up paper losses of $1.3 billion on Tuesday after Tesla shares rallied 11 percent.

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.

"Shareholders could potentially be misled if the statement omits material information", attorney Joe Tabacco said.

Musk has a history of setting aggressive sales targets that critics have called unrealistic.

The cases are Isaacs v Musk et al, U.S. District Court, Northern District of California, No. 18-04865; and Chamberlain v Tesla Inc et al in the same court, No. 18-04876.



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