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Home / Business / Two lawsuits accuse Elon Musk of making false statements to boost the Tesla share price

Two lawsuits accuse Elon Musk of making false statements to boost the Tesla share price



  What happens when Tesla becomes private?

Two new lawsuits accuse Tesla and his CEO Elon Musk of violating the federal securities law by allegedly making false statements to boost the company's share price.

The complaints filed this week at the San Francisco Federal Court require Musk to mislead investors when he said on Twitter that he had secured the funding Tesla ( TSLA ) to take privately.

It accelerated Tesla's share price immediately. But in the days after that, it lost most of its gains and responded, at least in part, to reports by Bloomberg and the Wall Street Journal that the Federal Securities and Exchange Commission investigated Musk's claim.

Tesla did not want to comment on this story.

One of the lawsuits filed by shareholder Kalman Isaacs is seeking class action status for investors who bought Tesla shares on August 7 and August 8. Another lawsuit filed by William Chamberlain demands class action lawsuits for those who have bought or sold Tesla shares between 7 and 1

0 August.

Both lawsuits accused Musk or Tesla of violating short sellers with false information.

"It is clear that the Defendant Musk has materially provided false and misleading information regarding the Going Private Transaction in order to seek personal revenge and squeeze out the short sellers who allegedly plagued him for months," Isaacs claims Conditions.

Short sellers are investors who bet against a company and pay attention that the stock price falls. Tesla is the shortest company on Wall Street, and Musk has talked a lot about his dissatisfaction with short sellers.

He has accused her of manipulating the press by planting stories that cast Tesla in a bad light.

One expert, Jill Fisch, a professor of business law at the University of Pennsylvania Law School, said Chamberlain's and Issac's claims were successful only if they could prove that Musk and Tesla did not actually finance the transaction searched or "secured".

Even a "preliminary commitment" with an investor or bank would be enough to support the idea that Musk's statements were made in "good faith," Fisch said. So, even if Musk had posted the tweet in the hope of harming short sellers by increasing the Tesla stock price, it would not be illegal if it were not untrue, she said.

"The aim of the Securities Law is to provide the capital markets with accurate information and the motivation of the people is really irrelevant," said Fisch.

CNNMoney (New York) First published August 11, 2018: 5:59 pm ET


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