Tesla and its billionaire chief Elon Musk were hit by two new lawsuits yesterday, over claims that Musk's surprise proposal to take the company private was scheme created to target short-sellers of Tesla stock.
In a proposed class-action complaint filed with the federal court in San Francisco, Kalman Isaacs said the scheme was conducted in part to "completely decimate" short-sellers, eventually leading to an inquiry by the US Securities and Exchange Commission (SEC).
The suit, which was filed in U.S. District Court for the Northern District of California, comes three days after Musk posted a tweet saying that he meant to take the company private at $420 a share and that funding was "secured".
As a result, Tesla shares jumped 11 percent, causing so-called short-sellers who have been betting on the stock crashing for years to lose millions. Tesla has not commented on this report. Musk is Tesla's largest shareholder, with a 20% stake in the company.
"Ask TSLA to show you the agreement (s) signed by their funding source (s) by 5 pm EST that demonstrates funding is "secured" and 'certain, '" he wrote, using the company's ticker symbol. The total cost is about $72 billion.
Tesla, under its CEO Elon Musk, is reportedly looking for finding from a wide range of investors so as to prevent a concentration of ownership.
They have frequently been the target of Musk's ire, and in announcing the plan this week he cited the advantage of getting away from short-term pressures and the "wild swings" in the stock price. A Musk investigation might be a best-case scenario for Tesla shorts, but CNBC's Jim Cramer said an investigation is a longshot.
The worst affected segment appears to be the short-sellers in the market who sell high and do the repurchase later.
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.
Speculation had been swirling around Tesla and Musk's disclosures amid the yearlong struggle the company had ramping up production of the Model 3 sedan, with Musk fielding a question on the company's latest earnings call about whether a notice from a regulator was keeping him from being able to raise more capital.
Irons has a small position in out-of-the money put options on Tesla that make money if the stock declines.