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Elon Musk uses Twitter to taunt Tesla short sellers amid legal scrutiny

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Tesla founder and CEO Elon Musk used Twitter to taunt investors who have bet against his company, even though his previous Twitter comments have spurred a government investigation and shareholder lawsuits.

External Link: Tweet Musk fav short shorts

The tweets are aimed at "shorts," or investors who borrowed shares of Tesla and immediately sold them with the hope that Tesla's share price would fall.

That would allow the shorts to buy back the stock at a lower price, return the shares to the lender, and pocket the difference.

Shorting a stock can temporarily lower its price, making short investors a frequent target of CEO wrath.

The Twitter comments could potentially affect Mr Musk's legal situation.

On Tuesday he tweeted that he had secured funding to buy all Tesla shares and take the company private.

The Securities and Exchange Commission is investigating Musk's disclosure of the potential deal, according to reports earlier this week.

Mr Musk's attitude toward short sellers could be relevant, securities law experts have said. Mr Musk's tweet about taking Tesla private sent the stock soaring 11 percent Tuesday and cost short sellers roughly $US1 billion ($1.36 billion), according to some estimates.

If his motive for the tweet "was frustration with short sellers, then that could be a case of market manipulation," John Coffee Jr, a Columbia University law professor and corporate-governance expert, said.

Mr Musk mocked short investors in a series of tweets, suggesting his antipathy toward them had not dimmed.

"Short shorts coming soon to Tesla merch," Mr Musk tweeted. "What are your fav short shorts?"

James Cox, a professor of securities law at Duke University, downplayed the significance of the tweets, noting that Mr Musk's antipathy toward short sellers is well-known.

"It's hard for me to think that these blasts are going to get him in trouble," Mr Cox said.

On Friday, two lawsuits were filed accusing Musk of seeking to harm short sellers by artificially running up the price of the company's shares through his Tuesday tweets.

One tweet on Tuesday said that funding to take Tesla private was "secure."

If there is evidence that the financing was not fully locked down, Mr Musk's claim would expose him to allegations of fraud, Mr Coffee said.

AP

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