Elon Musk Sent Tesla Short-Seller a Box of Defective Short Shorts

Elon Musk Sent Tesla Short-Seller a Box of Defective Short Shorts

One tweet on Tuesday said that funding to take Tesla private was "secure". Elon could wind up in trouble if he had no factual basis for making the claim "funding secured".

Tesla did not respond to a request for comment.

Musk's tweet stunned investors, with many raising questions about his claim that funding for the venture had been secured.

Whether or not that will result in civil and criminal penalties for Musk remains to be seen as some reports suggest that the tweet sent out by Musk have left him vulnerable to such charges.

The lawsuits filed by Isaacs and William Chamberlain said Musk's and Tesla's conduct artificially inflated Tesla's stock price and violated federal securities laws.

Many in U.S. financial circles are wondering where he will he get all this money, and have turned skeptical despite the reverence in which they normally hold Musk, who founded the company in 2003 to transform cars into tech marvels. Tesla is the most shorted company on Wall Street, and Musk has been very vocal about his displeasure with short sellers. In a letter to clients dated July 31, Einhorn said he was happy his Tesla lease had ended, citing issues with the car's touch screen and power windows.

The briefs battle royale began after Einhorn's hedge fund said in a letter he was "happy that his Model S lease ended" and was replacing the vehicle because of problems with the technology. Short-sellers are one of the reasons he wants to take the company private - to protect Tesla from the distractions of share price volatility and pressure to meet quarterly financial targets. The agency would also look at the veracity of the statement Tesla later posted on its website and whether the company should have made additional statements based on what it knew. It covers those who purchased or sold shares on and between Tuesday through the end of day Friday and whose investments were damaged by Musk's comments.

The lawsuit against Elon Musk Mr. Isaacs is a short-seller, and this is apparently legal on Wall Street, even though another short-seller, Carson Block of Muddy Waters Capital says, "Short-sellers are not ever going to be loved by Wall Street in the USA, but we're pretty lucrative for banks, because of the borrow fees we pay".

But Musk has been open about his disdain for Tesla short-sellers.

Musk could soon be under investigation by the SEC if he can't prove there actually is a reasonable $420 offer on the table.

Since rising sharply in the immediate aftermath of Musk's statement, Tesla stock has largely given back its gains, closing on Friday at $355.49.