August 10, 2018 6:16 pm

Elon Musk accused in lawsuit of defrauding shareholders by proposing to take Tesla private

Tesla Inc founder and Chief Executive Elon Musk were sued on Friday by an investor who said they defrauded shareholders in a scheme to manipulate the electric car company's stock price, starting with Musk's Aug. 7 tweet that he might take Tesla private.

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Tesla Inc founder Chief Executive Elon Musk were sued on Friday by an investor who said they defrauded shareholders in a scheme to manipulate the electric car company’s stock price, starting with Musk’s Aug. 7 tweet that he might take Tesla private.

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 U.S. Securities and Exchange Commission.

READ MORE: GO Elon Musk suggests taking Tesla private, shares surge

The class includes investors who bought Tesla shares as they were rising in the wake of Musk’s tweet. The share price later fell.

© 2018 Reuters

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