(CNN Money) — Two new lawsuits accuse Tesla and its CEO Elon Musk of violating federal securities law by allegedly making false statements to boost the company’s stock price.
The complaints, filed in federal court in San Francisco this week, claim Musk sought to mislead investors when he said on Twitter that he had secured the funding to take Tesla private.
It boosted Tesla’s stock price immediately.
But in the days since, it has lost most of those gains, reacting, at least in part, to reports from Bloomberg and the Wall Street Journal that the federal Securities and Exchange Commission is investigating Musk’s claim.
Tesla declined to comment for this story.
One of the lawsuits, filed by shareholder Kalman Isaacs, seeks class action status on behalf of investors who bought Tesla stock on August 7 and August 8.
Another, filed by William Chamberlain, seeks class action for those who bought or sold Tesla stock between August 7 and 10.
Both lawsuits accused Musk or Tesla of harming short sellers with false information.
“It is clear that Defendant Musk Tweeted materially false and misleading information regarding the Going Private Transaction to exact personal revenge and ‘squeeze-out’ the short-sellers who had purportedly been badgering him for months,” the complaint filed by Isaacs states.
Short sellers are investors who bet against a company and look for its stock price to go down.
Tesla is the most shorted company on Wall Street, and Musk has been very vocal about his displeasure with short sellers.
He’s accused them of manipulating the press by planting stories that paint Tesla in a bad light.
One expert, Jill Fisch, a business law professor at the University of Pennsylvania Law School, said Chamberlain’s and Issac’s lawsuits will only be successful if they can prove Musk and Tesla did not actually seek or “secure” funding for the transaction.
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.
So, even if Musk did post the tweet hoping to damage short sellers by boosting Tesla stock price, it wouldn’t be illegal unless it were untrue, she said.
“The goal of the securities law is to provide the capital markets with accurate information, and people’s motivation are really beside the point,” Fisch said.
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