On Friday, Elon Musk and Tesla got sued by a bunch of investors. The investors say that Elon Musk purposefully proposed to take Tesla company private to squeeze short-sellers with his fraudulent plan. The investors had no choice but to file a case against the company after Elon Musk posted a tweet on Tuesday to announce that he going to take Tesla private.
In the tweet posted by Elon Musk on Tuesday, he has stated that he will consider taking Tesla at a price of $420 per share and he announced that the funding was already secured. The total cost is about $72 billion. Elon and Tesla have now got sued for manipulating the price of the shares. The share prices of Tesla hit $380, that is estimated to be about 11% increment but soon the share prices started to fall back over seven percent in two days. One of the shareholders, Kalman Isaacs said that Musk has issued a misleading information into the market as the finance is not secured yet.
The misleading information provided by Elon forced the short sellers of Tesla to buy shares at manipulatively inflated prices. Kalman Isaac also told that all purchasers of Tesla were affected by this event. There is no evidence posted by either Elon or Tesla related to the secured finance. According to the case filed by the investors, Elon Musk posted the manipulative tweet to increase the share costs higher and narrow the sellers that were bidding against Tesla. The case is filed in Federal Court in San Francisco.
Elon Musk has a twenty percent stake of Tesla and he is the largest shareholder. Many other investors have now started to file cases against Elon Musk and Tesla. The case is going to be consolidated and presented in front of a single Judge to solve the matter soon. According to other Shareholders, the investors have a valid point to raise against Elon Musk for quoting the share costs almost 25 percent more than the trading price.
It is not the first time when Elon Musk is in News for such news. Previously, he has a history of setting unrealistic targets.