Markets

Tesla's board might not know where Elon's 'secure' funding is coming from

Tesla's board might not know where Elon's 'secure' funding is coming from

The tweets are aimed at "shorts", or investors who borrowed shares of Tesla and immediately sold them with the hope that Tesla's share price would fall.

When Elon Musk took to Twitter earlier this week and said he was considering taking the company private again, and that he had "secured" funding, that sounded pretty ironclad.

Kalman Isaacs, one of the investors who filed suit Friday in a San Francisco court, claimed Musk's tweets were "designed to completely decimate short-sellers".

On Wednesday, several members of Tesla's board issued a statement to say they had been informed of Musk's intentions a week before the news was made public. "Funding Secured", he wrote.

The two separate cases have been filed in a court in the Northern District of California, which is not far from where Tesla is located, Palo Alto.

The class includes investors who bought Tesla shares as they were rising in the wake of Musk's tweet.

FILE PHOTO: Tesla Motors Inc Chief Executive Elon Musk pauses during a news conference in Tokyo September 8, 2014.




Musk's tweets helped push Tesla's stock price more than 13 percent above the previous day's close.

The stock has since given back more than two-thirds of that gain, in part following reports that the U.S. Securities and Exchange Commission had begun inquiring about Musk's activity.

But he added that the conduct of Tesla and its chief executive Mr Musk had caused volatility and cost short-sellers hundreds of millions of dollars.

Short-sellers of Tesla's stock have faced increasing aggression from Musk over recent months, with the billionaire citing the lack of market support as one of the main reasons he wants to take the company private.

Tesla's market value exceeds $60 billion, and its shares closed Friday up $3.04 at $355.49.

According to the complaint, Isaacs bought 3,000 Tesla shares on August 8 to cover his short position, or bet that the price would decline, in the company.


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