- Elon Musk took aim at the SEC and applauded the DOJ's short-seller probe, CNBC said.
- In an email to the news outlet, Musk said he is "greatly encouraged" by the DOJ's query, which involves two former Tesla shorts.
- He added that hedge funds push "short and distort" efforts that hurt small-time investors.
Tesla chief Elon Musk applauded the US Department of Justice's probe into potential short-seller abuses — and snubbed the US Securities and Exchange Commission — in a rare email to a media outlet.
In a Tuesday email to CNBC, Musk said, "I am greatly encouraged by the Justice Department investigating short sellers. This is something the SEC should have done, but, curiously, did not."
Dozens of short sellers have been caught up in a Justice Department probe into their practices and whether they conspired to drive down stock prices by sharing critical research reports before their wider publication. Andrew Left and Carson Block, two short sellers who have reportedly bet against Tesla stock in the past, have been caught up in the inquiry.
As for the SEC, the regulator and Musk have had a contentious relationship stoked by the Tesla chief's Twitter account and probes from the agency. Most recently, the SEC pushed back after Musk accused the agency of harassment and "endless, unfounded investigations."
Musk, who is known for avoiding media and opting to share information on Twitter, did not immediately respond to Insider's request for comment. The SEC and Justice Department declined to comment.
In his email to CNBC, the Tesla chief also lashed out at "sophisticated hedge funds," which he said take advantage of small investors.
"They will short a company, conduct a negative publicity campaign to drive the stock price down temporarily and cash out, then do it all over again many times," he said in the email. "The term for this, as you may be aware, is 'short & distort.'"
His comments echo a tweet he wrote amid the GameStop trading mania early last year when he questioned short-seller practices and called it a "scam."
So far this year, Tesla shares have sunk 35% amid a broader market slump that has hit tech and high-growth stocks the hardest.
