Citron Research’s famous short seller Andrew Left is the latest to carry the torch for Tesla skeptics and shorts.
In a Securities Class Action complaint that was filed on September 6, 2018 (link here), noted short seller Andrew Left of Citron Research has sued Tesla, naming both the company and Elon Musk as defendants. In the suit, Left claims that Musk/Tesla “artificially manipulated the price of Tesla securities to damage the Company’s short sellers”.
Left alleges that Musk “artificially manipulated the price of Tesla securities with objectively false tweets in order to ‘burn’ the company’s short sellers.” It calls Musk’s actions a “fraudulent scheme”.
Speaking on behalf of short sellers, Left then goes on to state what an important role they play in the market. He also lays out that company’s sometimes try to “squeeze” out short sellers. After this, he makes the case that Musk’s actions followed a slate of “ill conceived” attempts to artificially manipulate the price of Tesla [stock] in order to create such a squeeze.
Left alleges that Musk’s August 7th tweets regarding going private were “materially false and misleading”.
The suit lays out all communication from Musk and the company after the Tweet was posted and documents all press accounts of what happened, in order to try and make the case that there was never a go-private deal to begin with.
Further, the suit alleges scienter, claiming Musk “acted with scienter in that [he] knew or was reckless as to whether the statements he made were materially false and misleading.”
Left alleges on behalf of a class that economic loss took place as a result of Musk’s “false and misleading statements” and “scheme to deceive the market”
The suit has 3 counts:
- Violation of Section 10 (b) of the Exchange Act and Rule 10b-5 Against All Defendants
- Violation of Section 10 (b) of the Exchange Act and Rule 1b-5 for Market Manipulation
- Violation of Section 20 (a) of the Exchange Act, specifically against Elon Musk
Attached to the suit is the following declaration, which, along other things, states that Left is willing to act as lead plaintiff:
More interestingly, there are 3 pages of trading exhibits that show Left transacting in tens of millions of dollars in Tesla stock and options, using two accounts, over about 11 days.
Ahead of the coming lawsuits against Tesla, we will be interested to see if this particular case goes to discovery, and we’d be willing to bet that Left is hoping the same.
Full lawsuit below
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