Elon Musk And Tesla Slammed With New Lawsuits

Yesterday, two new lawsuits were filed against Tesla and Elon Musk, its billionaire chief executive, over claims that the shocking proposal of Musk to take the firm private was a scheme that is aimed to target short-sellers of the stocks of Tesla.

Earlier this week, Musk announced on Twitter that he was considering whether to take the electric carmaker private at a share price of $420 (£328.86) and a total market value amounting to $72 billion. He added that he had already secured the required funding.

A lawsuit was filed by Kalman Isaacs, a Tesla investor. It said that the tweets of Musk amounted to a “nuclear attack” on the short-sellers. He said that it was designed to “completely decimate” them for not believing in the stock of Tesla to date.

Last Wednesday, various members of the board of Tesla issued a statement to say that they had been informed regarding the intentions of Musk a week before the news was released to the public. However, others stayed silent as they have yet to see further detailed financial evidence coming from Musk.

Last Friday, the two lawsuits were filed by Isaacs and William Chamberlain. Both alleged that the behaviour of Musk and Tesla after the tweets violated the securities law of the United States, and inflated the share price of the company artificially.

Tesla has not yet made a public statement regarding the matter.

The tweets of Musk that were posted last tuesday temporarily caused the share price of Tesla to surge by over 13 percent, having since crashed back down by about two-thirds of that increase after the Securities and Exchange Commission of the United States initiated an inquiry into the activity of Musk.

Isaacs says that the volatility of Tesla on Wall Street following the Twitter storm has cost the shareholders shorting the stock hundreds of millions of dollars, and caused all the securities purchasers of Tesla to pay inflated prices over the three-day period that led up to Friday, the 10th of August.

Short-sellers of the stocks of Tesla have experience heightening aggression from Musk over the past months, with the billionaire noting the lack of market support as one of the main reasons why he wants to take the firm private.

The share price of Tesla edged higher as the markets closed late last night, rising by 0.86 percent to $355.49.