(Bloomberg) -- The uproar over Elon Musk's August tweets about taking Tesla Inc. private has come to this: The investors suing to recoup hundreds of millions of dollars in losses have tied their case up in knots in a squabble over who should lead the litigation.
The judge caught in the middle spoke up Tuesday to explain why he chose a group of shareholders whose investments include both long and short positions over another group that held only long positions but claims to have incurred slightly larger total losses.
Defending himself before an appeals panel that is deciding who should be the lead plaintiff, U.S. District Judge Edward Chen wrote that the case presents difficult questions of how to calculate losses. He also said his decision to appoint a lead plaintiff with a mixed portfolio took into account the possibility that there may be conflicting interests among investors who were shorting Tesla and those who weren't.
“Short positions may have an interest in telling a specific narrative -- i.e., that Mr. Musk has a history of disliking short sellers and that the tweet at issue was designed to harm them specifically,” Chen wrote. “Long positions may not share the same interest in establishing that narrative.”
To contact the reporter on this story: Peter Blumberg in San Francisco at pblumberg1@bloomberg.net
To contact the editors responsible for this story: Elizabeth Wollman at ewollman@bloomberg.net, Craig Trudell
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