TESLA’S MUSK MAY SETTLE SUIT BUT READY FOR FIGHT: SOURCES

Tesla Inc’s Elon Musk could settle with US regulators who have sued to remove him from the electric carmaker’s leadership, but he is prepared to fight the securities fraud lawsuit against him in court, sources said as shares plunged about 14%.

Musk, Tesla’s chairman and chief executive, has been directly involved in almost every detail of its product development and technology strategy, and is credited as the driving force behind the loss-making company’s ability to raise capital.

The cost of insuring Tesla debt against default rose to its highest price ever on Thursday and the plummeting share price attracted new short sellers, who bet against the stock.

Short sellers notched $1.27 billion Thursday alone in paper profits, according to S3 Partners, which said Tesla recently regained the title of most-shorted US stock.

The US Securities and Exchange Commission (SEC) accused Musk on Thursday of tweeting false and misleading information in August about financing for his now-abandoned plan to take the company private, and said it was seeking to remove him as an officer or director.

The billionaire entrepreneur said he had done nothing wrong and the company’s board said it supported him. The Wall Street Journal on Friday, reported that Musk believed he had a verbal deal for financing from Saudi Arabia’s sovereign wealth fund to take Tesla private. Musk said in a blog he left a July 31 meeting with the fund’s managing director “with no question that a deal with the Saudi sovereign fund could be CLOSED.”REUTERS