Long story short, short sellers submitted an "intriguing" report that made Tesla look bad. Elon Musk retaliated by hooking up with the Saudis, (why wouldn't he hook up with the leaders of the UN Human Rights Council?) and threatened to take his company private. This caused a rise in Tesla stock, and screwed the short sellers. However, it turns out that Musk might've broken a law, or two, or three, or four, and so they're suing him.
The prominent short-seller Andrew Left has sued Tesla Inc and its Chief Executive Elon Musk, saying Musk fraudulently engineered his since-abandoned plan to take Tesla private to "burn" investors hoping the electric car company's stock price would fall. Left, whose reports at Citron Research often push stock prices lower, said in his proposed class-action complaint on Thursday that Musk's issuance of materially false and misleading information harmed short-sellers like himself, as well as those hoping Tesla's stock price would rise.
The shareholder lawsuit is one of at least seven targeting Musk since he stunned investors by announcing on Twitter on Aug. 7 that he might take Tesla private for $420 per share, in a $72 billion transaction for which "funding" had been "secured." That announcement drove Tesla's share price up more than 13 percent from its close the prior day. Musk announced on Aug. 24 that Tesla would stay public. Tesla did not respond to requests for comment on Left's lawsuit, which was filed in San Francisco federal court.
Short-sellers borrow shares they believe are overpriced, sell them, and then repurchase shares later at what they hope will be lower prices to make profits. Known as an activist investor, Left was among the first short-sellers to challenge Canadian drug company Valeant, which he called a "pharmaceutical Enron" after the failed energy company, before its stock price plunged amid worries about its business practices and regulatory probes. Valeant is now called Bausch Health Companies Inc. Musk has long used Twitter to criticize short-sellers, and Left said his conduct violated federal securities laws.
Thoughts NSG?
After laughing at both sides, I think that Musk is in the wrong here. He used Twitter as a bully pulpit, and is that something that we need to encourage? Also, I think it's karma hitting Musk for his little stunt against the heroic divers. But if Musk wins, I won't feel bad for Left. Will you?