Musk, who is Tesla's largest shareholder with a 20 percent stake in the company, had previously expressed concern about what he referred to as "negative propaganda" from short sellers.

Tesla Inc (TSLA.O) and Chief Executive Elon Musk were sued twice on Friday by investors who said they fraudulently engineered a scheme to squeeze short-sellers, including through Musk's proposal to take the electric vehicle company private.

The complaint alleges violations of US securities law and was filed Friday as a class action in federal court in San Francisco.

Musk's August 7 tweets helped push Tesla's stock price more than 13 percent above the prior day's close.

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.


It's unclear when Musk sent the shorts to Einhorn but, in the past week, the Tesla chief executive has found himself embroiled in a controversial move to take his auto company off public markets .

Tesla did not respond to a request for comment. His personal stake in Tesla is nearly 20 per cent.

Musk, often the center of controversy, did not prove he had the funds to finance the operation - despite tweeting "funding secured".

San Francisco attorney Joe Tabacco expressed his view that shareholders may actually have a viable claim against Tesla, according to Bloomberg.

"The most striking feature of the quarter is that Elon Musk appears erratic and desperate", Einhorn's letter added.


April 3, 2018 - Musk says Tesla will not need to raise more capital in 2018.

Another complaint filed by William Chamberlain claims that Musk "violated federal securities laws and artificially inflated Tesla's share price", reports the BBC.

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.

The Wall Street regulator is reported to have asked Tesla why plans to go private were disclosed on the social media platform rather than in an official filing.

The case is Isaacs v Musk et al, U.S. District Court, Northern District of California, No. 18-04865.


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