Elon Musk accused of making false statements to boost Tesla share price

Gladys Abbott
August 13, 2018

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.

"Musk's statement that he had secured funding was especially material andsignificantly moved the market, ;" shareholder Kalman Isaacs said in the complaint. The PIF is also a major backer of SoftBank Vision Fund. The Saudi fund hasn't made any firm decisions on whether to increase its stake, or by how much, but talks are ongoing, the person said.

Reuters reported on Wednesday that SoftBank was not now pursuing a deal for Tesla given its investment earlier this year in rival GM Cruise.

The sources requested anonymity because the deliberations are confidential.

One lawsuit, filed by Tesla investor Kalman Isaacs, said Musk's tweets amounted to a "nuclear attack" on short-sellers, created to "completely decimate" them for not believing in Tesla's stock to date.

It boosted Tesla's stock price immediately.

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Tesla had no immediate comment. 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.

SEC enforcement attorneys in the San Francisco office were already gathering general information about Tesla's public pronouncements on manufacturing goals and sales targets, according to the people who asked not to be named because the review is private.

A veteran shareholder lawyer in San Francisco said investors may have a viable claim against Tesla.

Musk had raised the go-private possibility with the board last week, according to a statement from six of Tesla's nine directors.

Investment bankers and analysts have so far reacted with scepticism, telling Reuters it would be hard for Musk, whose net worth is pegged by Forbes at $22 billion, to raise the equity and debt financing needed for the deal given Tesla is not turning a profit.

However, the deal structure would come with big logistical and legal challenges when it comes to buying out smaller shareholders, analysts have said.

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