Elon Musk sued over proposal to take Tesla private

Elon Musk sued over proposal to take Tesla private

Tesla Inc and Chief Executive Elon Musk were sued on Friday by an investor who said they committed securities fraud in a scheme to "completely decimate" short-sellers that included Musk's proposal to take the electric vehicle company private.

One expert, Jill Fisch, a business law professor at the University of Pennsylvania Law School, said Chamberlain's and Issac's lawsuits will only be successful if they can prove Musk and Tesla did not actually seek or "secure" funding for the transaction.

In one of the lawsuits, the plaintiff Kalman Isaacs said Musk's tweets were false and misleading, and together with Tesla's failure to correct them amounted to a "nuclear attack" created to "completely decimate" short-sellers.

The complaint alleges violations of US securities law and was filed Friday as a class action in federal court in San Francisco. The company is based in nearby Palo Alto, California.

FILE PHOTO: Tesla Motors Inc Chief Executive Elon Musk pauses during a news conference in Tokyo September 8, 2014. But in the days since, it has lost most of those gains, reacting, at least in part, to reports from Bloomberg and the Wall Street Journal that the federal Securities and Exchange Commission is investigating Musk's claim.

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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.

But he added that the conduct of Tesla and its chief executive Mr Musk had caused volatility and cost short-sellers hundreds of millions of dollars.

Tesla's share price edged higher as markets closed late last night, increasing 0.86 per cent to $355.49.

According to his complaint, Isaacs bought 3,000 Tesla shares on August 8 to cover his short position.

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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