Tesla and company chief executive Elon Musk have been sued by an investor claiming that shareholders have been defrauded in a scheme designed to manipulate the automaker’s stock price.
The class-action complaint filed with the federal court in San Francisco claims that the scheme started on August 7, following Musk’s unexpected tweet that he was thinking about taking the electric automaker private.
Kalmann Isaacs asserts that this scheme was concocted to “completely decimate” short-sellers. Additionally, it is alleged that Musk’s tweets were false and misleading and that his conduct artificially inflated Tesla’s stock price and violated federal securities laws.
Following Musk’s tweets about taking Tesla private, the company’s share price jumped more than 13 per cent over the previous day. Following reports that the U.S. Securities and Exchange Commission was investigating Musk’s activity, the company’s stock price has pulled back more than two-thirds.
In his original tweet, Musk said that funding had been secured to take Tesla private at $420 a share, valuing the company at $72 billion. Musk has failed to provide evidence that the necessary funding has been secured.
In an email sent to Tesla employees, Musk said he was considering taking the firm private for a number of reasons. One of these reasons is the public scrutiny which Tesla faces as a public company. He also said that taking Tesla private will allow it to better its focus on long-term goals, citing SpaceX as an example of a company that is “far more operationally efficient” than Tesla.
The car manufacturer didn’t respond to a request for comment from U.S. News.
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