INTERNATIONAL - Tesla Inc and Chief Executive Elon Musk were sued on Friday by an investor who said they defrauded shareholders in a scheme to manipulate the electric car company’s stock price, starting with Musk’s Aug. 7 tweet that he might take Tesla private.
In a proposed class-action complaint filed with the federal court in San Francisco, Kalman Isaacs said the scheme was conducted in part to “completely decimate” short-sellers, eventually leading to an inquiry by the U.S. Securities and Exchange Commission.
The lawsuits were filed three days after Musk stunned investors by announcing on Twitter that he might take Tesla private in a record $72 billion transactions that valued the company at $420 per share, and that “funding” had been “secured.”
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” designed to “completely decimate” short-sellers.
The lawsuits filed by Isaacs and William Chamberlain said Musk’s and Tesla’s conduct artificially inflated Tesla’s stock price and violated federal securities laws.