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Tesla CEO Musk accused of defrauding shareholders, sued by investors

11 August 2018

The board of directors was informed of Musk's idea to turn Tesla into a privately-held company at least a week before he tweeted about it, six of the nine board members confirmed in a brief statement.

A second source close to the situation also said PIF was not taking part in any such plan at this stage.

The billionaire claimed funding had been "secured" for a deal which would value the firm at a price of $420 (£328) per share - more than double Apple's current value ($207 per share). This source said that the Saudi fund would not make an investment of this kind without seeking guidance first from Softbank. If there is evidence that the financing wasn't fully locked down, Musk's claim would expose him to allegations of fraud, Coffee said.

Elon Musk - the founder, CEO, and lead designer at SpaceX, and the co-founder of Tesla - speaks at the International Space Station Research and Development Conference in Washington, US, July 19, 2017.

The U.S. Securities and Exchange Commission is examining whether Musk's funding-secured tweet was meant to be factual, intensifying its scrutiny of Tesla's public statements after the announcement, according to people familiar with the matter.

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Independent analysts argue the central bank should instead raise rates to tame inflation and support the currency. In New York, the Dow Jones Industrial Average fell 185.15 points, or 0.73 per cent, to 25,324.08.

Tesla did not respond to a request for comment on the proposed class-action complaints filed in the federal court in San Francisco. It would also remove the company from the glare of Wall Street that comes with reporting quarterly earnings publicly.

Short-sellers make a profit by borrowing overpriced shares, selling them and then buying them back at what they hope will be a lower price.

Musk has also said he would be looking to keep his ownership of Tesla at around 20 percent in a buyout deal, and that a special objective vehicle, like the one that exists at his aerospace company SpaceX, would allow Tesla shareholders to remain invested if they so choose.

Tesla shares were trading at $350.69, down about $6 from where they were before Musk's tweet on Tuesday sent them soaring to a near one-year high.

Tesla CEO Musk accused of defrauding shareholders, sued by investors