Tesla, Elon Musk sought to ‘burn’ short-sellers, says short-seller Andrew Left in lawsuit
The suit is one of at least seven targeting Musk since he said on August 7 he might take Tesla private in transaction valuing the company at US$420 per share
The prominent short-seller Andrew Left has sued Tesla and its CEO Elon Musk, saying Musk fraudulently engineered his since-abandoned plan to take Tesla private to “burn” investors hoping the electric car company’s stock price would fall.
Left, who runs Citron Research, said in his proposed class-action complaint on Thursday that Musk’s issuance of materially false and misleading information harmed short-sellers as well as those hoping Tesla’s stock price would rise.
“Defendant Musk artificially manipulated the price of Tesla securities with objectively false tweets in order to ‘burn’ the company’s short-sellers,” Left said.
“In the succeeding days, the truth regarding the supposedly ‘secure’ financing needed to effectuate the going-private transaction began to emerge, exposing the fraudulent scheme,” he added.
The shareholder lawsuit is one of at least seven targeting Musk since he stunned investors on Twitter on August 7, saying he might take Tesla private in a US$72 billion transaction valuing the company at US$420 per share, and that “funding” had been “secured.”
Musk announced on August 24 that Tesla would stay public.
Tesla did not immediately respond to requests for comment on Left’s lawsuit, which was filed in San Francisco federal court.
Short-sellers borrow shares they believe are overpriced, sell them, and then repurchase shares later at what they hope will be lower prices to make a profit.
Musk has long used Twitter to criticise short-sellers, and Left said his conduct violated federal securities laws.
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