Tesla's board seeking more info on Musk's financing plan

The Tesla logo is seen outside of their showroom in Washington DC.					Saul Loeb AFP  Getty Images

"Ask TSLA to show you the agreement (s) signed by their funding source (s) by 5 pm EST that demonstrates funding is "secured" and 'certain, '" he wrote, using the company's ticker symbol.

Tesla's board has not received a detailed financing plan from Chairma/CEO Musk, and is seeking more information, Reuters reported last Thursday.

"Short shorts coming soon to Tesla merch", Musk tweeted.

Tesla did not respond to a request for comment on the proposed class-action complaint filed in the federal court in San Francisco.

On Tuesday, the irascible entrepreneur tweeted that funding for the transaction at $420 a share had been "secured", but offered no proof or documentation.

Whether or not that will result in civil and criminal penalties for Musk remains to be seen as some reports suggest that the tweet sent out by Musk have left him vulnerable to such charges. And if that's true, then Musk violated USA securities laws, which prohibit a CEO from spreading false or misleading information about a company in order to manipulate its stock price.

Many in United States financial circles are wondering where he will he get all this money, and have turned skeptical despite the reverence in which they normally hold Musk, who founded the company in 2003 to transform cars into tech marvels.

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Investment bankers and Wall Street automotive sector analysts have so far reacted with skepticism saying it would be hard for Mr. Musk, whose net worth is pegged by Forbes at $22-B, to raise the equity and debt financing needed for the deal given Tesla is not turning a profit. Current short interest is hovering around 27 percent of Tesla's total float.

"'Funding secured' is a very strong term, and it has legal consequences", Pitt said.

Tesla's share price surged after the tweet, rising by as much as 12%, to over $381, before trading closed. The company is based in nearby Palo Alto, California. "It looks like the large short sellers are holding onto their positions", and increasing the positions at the stock's higher level, he said.

The agency would be able to answer those questions relatively quickly, but its second potential area of inquiry - Musk's intent with his tweets - would be more challenging, Pitt said. And ultimately, any punishment Musk or Tesla would receive would depend on the amount and strength of evidence the SEC found.

"The most striking feature of the quarter is that Elon Musk appears erratic and desperate", Einhorn's letter added.

"This whole course of events is highly problematic", Pitt said.

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