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UPDATE: Musk Comments: SEC Lists Tesla CEO Elon Musk As Defendant In Lawsuit
14 H BY ERIC LOVEDAY 240
The Securities and Exchange Commision has formally listed Tesla CEO Elon Musk as a defendant in a lawsuit.
The Securities and Exchange Commission filed the lawsuit on Thursday over what appears to be alleged securities fraud, likely tied to Musk’s “taking Tesla private” claim and/or secured funding claims.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Neither the SEC nor Tesla/Musk can comment on this due to it now being an open, official lawsuit.
***UPDATE: Scratch that. Musk commented to CNBC:
“This unjustified action by the SEC leaves me deeply saddened and disappointed. I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”
We’ve embedded the entire document on this developing story directly below:
Categories: Tesla
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240 Comments on "UPDATE: Musk Comments: SEC Lists Tesla CEO Elon Musk As Defendant In Lawsuit"
So if successful, this would prevent him from being an officer or director of Tesla or any other public company. Am I reading that right?
I’m sure some monetary punitive dollar value will be attached.
Either way, when he meets the criteria outlined in his job tasks by the shareholders (I think it’s the shareholders), He’ll be a filthy rich dude still.
If he is smart he’ll settle and delete his Twitter account.
+1
His Twitter account is more valuable than his being CEO of Tesla.
Plus that’d do more to punish Twitter than anyone else. Musk can just start putting content on x.com and I think a lot of people will stop using Twitter and just visit that website instead. I’d bet an app with push notifications every time the website is changed is listed on the app store within a week or two of that happening (Because I’ll make it if nobody else does.)
Well, Hold on. I agree on Twitter freedoms, but nothing can replace his value as CEO. This man is a magician who makes great things happen. Things far beyond the reach or capacity of ordinary Earthfolk. He has his lapses, I agree, but he is a giant among business leaders.
I guess america is on self destruct on all fronts.
When the Wall Street Journal puts Elon Musk and Angelo Mozilo in the same article, let alone sentence, I’m inclined to agree.
Nonsense. Who are you? His grandmother?
A settlement was prepared but rejected by Elon at the last minute.
This whole debacle is so ridiculous that I’m left wondering how many other bonehead moves Elon makes behind closed doors, hidden from the public eye. This one just happened to occur on Twitter, where it could be easily observed.
My guess is that it’s in the hundreds, over the years—but when your startup is acquired by PayPal (equivalent to being struck by lightning, or winning the lottery) those funds give you a lot of staying power. It’s better to be lucky than good.
The real monetary damages Mr. Musk faces are from civil actions by injured stock buyers and sellers (shorts and longs) on the day of the tweet and for some days after. These could be in 10 figures (not counting the pennies).
“10 figures”? That would be a high amount for a fine for one individual even if you’re talking Pesos or Rubles or Yen. 🙄
Certainly not billions of dollars! That’s so absurd it’s actually funny.
😆 😆 😆
Well, the longs could claim that they bought the shares in the expectation that they would receive 420 per share (as Elon claimed it was highly likely), but then lost when the shares headed south. The shorts could claim that they had to settle margin calls when the share price went up initially. The US is a litigious society so as executive you need to be very careful.
He is in trouble and I don’t like that because it will be a setback in Tesla’s mission. No more sleeping on the factory floor – he will be wasting his time with lawyers instead. The best thing he could do now is negotiate a fine without admitting liability. The secod best thing is for him to throw bis phone away and delete hos twitter account.
The first case of short sellers was about $1.3 billion in losses on Aug-7 alone, shorties are looking for a refund of those burn. Do the math : 1/3 of TSLA stock is shorted, at a stock market capitalization back in August of approx $60 billion this means $20 billion worth of shares are shorted. You can make a lot of money (or lose a lot) when the share price wildly fluctuates from max $387 to intra-day low of $255 (closing $262) after the podcast pot-session.
There are other long investors (including Tesla fanb0ys) who bought at $370-380 in the hope the $420 will materialize and also got burned.
There are Bond holders (the 5.3% subordinated due in 2025) who bought for parity, after the podcast they were down to $81 market price for $100 notional. Today Bloomberg wrote they are 500 bp above coupon (which means in plain English 10.3% yield now). At 7 years until maturity this means 7 years * 5% = 35% loss for Bondholders. Maybe reason for another class action lawsuit ?!
Not at all, the total float in Tesla stock was something like $10 billion (that’s 11 figures) the day of and after the tweet. I think I read that shorts (who are people with legal rights) lost over 1 billion covering their positions during the run up to $380. Ordinary (long position) investors who bought at the post tweet high have had similar losses from the subsequent decline.
BTW, I think Tesla’s cars are impressive and recognize that they are way ahead of the slowly developing competition. Nevertheless, this was a very boneheaded action on Mr. Musk’s part that may well cost him and/or Tesla an amount of money “that’s so absurd it’s actually funny” not.
Yes. Possibly the board will remove him from this role before the conclusion of the lawsuit.
LOL, no, that’s not gonna happen.
No way that is going to happen. Musk might or might not be the best CEO for Tesla, the board obviously isn’t the best board for Tesla.
You could remove them all and it would virtually make no difference, aside from the balance sheet.
If Musks steps down willingly, it’s because he thinks it’s the right decision. Big investors could put enough pressure on him, or he could realize himself, that people need to focus on Tesla‘s accomplishments, rather than what Musk does right now. And maybe one, or two board members will voice some concerns, but they won’t act.
But, if he is not allowed to be the director of a public company, the Tesla board will be truly forced into taking Tesla private. They know they cannot exist without him as the lead. But, if Tesla does go private and does the buyout at, I don’t know, say $420, then the Tweet was correct. So how can they find him guilty if he had a foolproof plan to take the company private?
Why? Is Tesla really that fragile? Is everyone else working there incompetent?
I’m honestly not convinced at this point that a change of CEO wouldn’t be good for Tesla. I think they need a more nuts and bolts oriented CEO to get production up and production costs under control. Elon Musk is fine as a visionary, but he doesn’t seem to be able to temper his vision by the constraints of reality. Some of his ideas just end up being too big and maybe some are just bad. He needs someone to balance him but as long as he’s on top no one can say otherwise, because he just won’t listen and will instead fire that person (just like the guy who said the production goals were unrealistic).
It’s one thing to shoot for the stars and not be afraid to take on a challenge others believe it’s impossible. But at some point if you take that sort of thinking too far, you just end up shooting yourself in the foot.
Also the guy seems overly stressed out, which is probably the cause of the tweeting that got him in trouble, as well as the whole rescue diver debacle.
Adding on to my comment above, Steve Jobs was ousted because he saw the Macintosh as the only thing that would save the company while John Scully argued just as vehemently that it was a loser and refused to spend any more money on it. They took their argument to the BOD and Jobs was ousted. Professional management, first Scully and then his successor Amelio (sp?) after Scully was fired, brought the company to the doorstep of Chapter 11. Only Jobs’ return from exile saved Apple. Look at it now. I spent my career around big time “professional” managers. I wouldn’t give two nickels for the lot of them. They ain’t all dat, not by a long shot.
Notice how Daimler fired its CEO this week because he didn’t get it on how to go electric? GM, and I believe Ford have fired their CEOs for much the same reason. Why? Those firms’ boards know Tesla will have them by the short and curlies within a decade if they kept schlepping along with their current managers. Without Musk’s innovating like crazy those threatened yesteryear CEOs could breathe a whole lot easier.
Apple without Steve Jobs was on the verge of bankruptcy 12 years later. The board brought Jobs back and the iMac, iPod, iPad, iPhone later it had $250 billion in the bank at his passing. Since Jobs died, Apple is still considered a large, successful company, the first with over $1 trillion in market value, but there are also complaints Apple has lost some of its pizzazz.
Musk is to Tesla what Jobs was to Apple. Not the same company without him.
Read the embedded file from the SEC, there was no foolproof plan, there was a vague meeting for 30 minutes with Saudi Investment-fund on July 31, where (at a then $299 share-price) they told Elon they acquired 4.9% TSLA shares so far and maybe under some circumstances they might buy some more – IF and only IF Tesla opens a Gigafactory in Saudi.
In the abstract? Yes. In the reality of this case of a dumb tweet? No, that is absolutely NOT going to happen.
Tesla is now the Best Selling EV brand in the World for 2018 YTD. Ahead of BYD.
http://ev-sales.blogspot.com/search/label/World
Looks like this has come right from top in US politics.
Looks like something that’s going to happen to a top US politician. Being sued for being stupid on Twitter… well maybe teenagers can learn something from it.
Right?
He can spew his talk of canceling order for a new Airforce 1 and their stocks drop but that’s OK?
He can spew Tariff talk on there and the stocks take a dive but that’s OK?
We can go on and on…..
He’s President.
President Tweet ‼️
Don’t you mean President Twit?
The president of a country is not the same as the officer of a publicly traded company. The rules for communication are far stricter for an officer than they are for someone in the general public. It’s the same with stock analysts. Who they talk to and what they can say are strictly regulated. Investment banks enact a firewall to make sure that their analysts cannot talk to their traders. These are the rules of the game when you’re dealing with the hard earned money of others.
Right the POTUS can lie everyday multiple times and his supporter’s will stand by the orange 🍊 in chief.
Like Trump isn’t dealing with our hard-won money every day?
If you don’t like the regulations in the market, then don’t list your company publicly. The rules are there for a reason.
My bet is that Tesla will point at public filings saying social media may be used to release financially material information. Not sure if that has been tested in court!
The problem is that he lied about having funding (could be exaggerated, doesn’t really matter still wasn’t true). It’s not a problem that he used Twitter the problem was what he said wasn’t true.
There are rules for being the CEO of a company and they apply to Musk no matter how much he and his diehard supporters would like otherwise.
I don’t see how this has anything to do with politics. I’m long TSLA and I am confident that in the long term this company will create a lot of value for its shareholders. However any CEO of a publicly traded company would have ended up with this lawsuit if they behaved like Musk. Just because he is an amazing innovator doesn’t mean that he doesn’t have to follow the rules of the stock market. Tesla has benefited enormously from the benefits of being publicly traded, like ease to raise capital. Now they also have to follow the rules. However even if Musk ends up being convicted, a change in CEO to a more operations and bottom line focused leader might actually be really beneficial in the long run. I am not worried about TSLA.
Musk is Musk’s biggest problem right now. Tesla would do a lot better going forward if they have Musk in a similar role to the role he plays at SpaceX. Which is a lot less hands on that at Tesla.
Other than this social media snafu, I won’t complain about Musk’s management of Tesla, not when he made the Model 3 the absolutely revolutionary success that it is. He changed the game, he’s the guy I want in charge, PERIOD
I also want him in charge, just not in charge of his social media accounts. The passwords for those should solely be with his lawyers, who should check every tweet.
Imagine you had someone powerful like the president of the counrty who would just spout any nonsense…..oh wait…
Your suggestion would be a disaster, like every one of Steve Jobs successors when he was exiled. The exception is Jobs’ own choice of replacement CEO – Tim Cook.
What do you mean? He can use the blueprint that he already implemented at SpaceX in Gwynne Shotwell.
Indeed, fundamentals are still good, particularly as they are over the Model 3 production hell. And Musk himself said last month that he’ll hand the keys of Tesla to anyone thinking he can do a better job. However, that’s an hell of distraction.
I agree, this SMELLS OF TRUMP!
Apparently you need to adjust your tinfoil hat; it’s affecting your sense of smell.
ICE industries, big oil and the vulnerable shorts.
Have you read the doc? It’s pretty clear that he violated the SEC rules. While I’m pretty sure he had no criminal intent and didn’t personally profit from the affair, it doesn’t matter. He shouldn’t be CEO (or any other formal Officer) of a public company, period. The reason for his actions (very likely , under too much stress) doesn’t matter either. The board should force him to resign any executive position, and make him a consultant.
SpaceX is enough of a fulltime job, and his kids would actually get to see him.
Not only did he violate the rules, he flat out lied to the SEC when interviewed. Big problem made bigger.
What about The Shorts Constantly Lieing About Tesla Going Bankrupt , that Tesla Stock Is Worth Nothing & They only Had Cash To Last a Week & All That BS ..
Well if the shorts are the CEO of a publicly traded co they should be put through the wringer but they probably aren’t…
What makes you think he lied to the SEC?
He read it on Reeking Alpha, so he “knows” it’s true! 🙄
The suit doesn’t make any claim of anyone lying to the SEC. Did you actually read the suit?
The Doc is a Load Of “BS”…Too much Lies & misinformation , & Negative Untruths by The Shorts ,,The Shorts Should Be SUED For Sabotage. Shorts Always Talk Down Tesla To Get The Stock Price Down to Fulfill their Agenda ….FACT:::Non Stop Constant LIES!!..
Sounding a bit like Stalin. Always someone else’s sabotage. No, Musk did a boneheaded thing that may well end up being expensive.
How much did you get for saying that, hmmm?
If you believe your words, there are no adjectives to describe how profoundly foolish your toxic suggestions are.
You’re way off base, dude. Wavelet is one of the more sensible, more well-informed people posting here. That doesn’t mean I entirely agree with him, but he’s certainly entitled to his opinion… because it’s an informed one, and yours isn’t.
The SEC’s case is weak, on ffbj’s observation Musk’s intent likely isn’t strong enough, certainly not to have a judge remove him. Fraud is a high bar. The suit pivots on the Saudi wealth fund indicating to Musk, that terms would be favorable to them, if Musk put something together. They have the resources to back their financial interests. Musk is just a genius, who is great but not perfect at many things. He thinks, he mulls, he tweets. He’s not a financial lawyer, savvy bean counter, or “seasoned CEO”. I don’t see the SEC winning, here. Two cents.
I actually think the problem is he doesn’t think enough, at least not before speaking/tweeting. Really it would be in his best interest to give up his Twitter account, or at least have a company lawyer sign off on each tweet before it goes out.
Also how can his motive be seen as anything other than to pump the stock price up? The intention seems pretty clear to me. This is simply not something CEOs are allowed to do and he absolutely shouldn’t have done it.
“since intent is required”
That is only in criminal cases. SEC filed civil suits.
DOJ is in charged of criminal cases.
If it’s only a civil suit, without any criminal charges, then won’t the outcome be limited to just a fine?
I’m not that knowledgeable on these matters, but applying common sense, I doubt that the outcome of this is going to be anything more than a wrist slap and a moderate fine. I think it would take a much more egregious impropriety on Elon’s part for the Board to force him to step down.
Not that I personally would object to seeing someone else as CEO of Tesla; I’ve been saying for some time that it may be time, or past time, for Elon to step back to a less prominent role at Tesla.
All just my opinion as an outsider looking in, of course.
Thee SEC is seeking to bar him from being a principal officer or director of any public company.
There is no way they could stop him from being in charge, even if he wasn’t CEO. He is the only ‘man with a plan’ for a great future.
Oops! 😳
Thanks for the correction, Doggy. That’s what I get for not reading the document in question.
The SEC has the statutory authority to ask a judge to enforce a bar. See: https://www.sec.gov/news/speech/2012-spch101812laahtm and https://www.sec.gov/about/offices/oia/oia_enforce/overviewenfor.pdf.
That doesn’t mean that a judge would grant that request. I am sure the defense would argue that the damage to Tesla, and to all Tesla stakeholders, and even the Bay area economy, would be large and would defeat the purpose of the SEC action (supposedly to protect investors). They could settle half-way and have Musk barred from the board, but not from being an officer, or the reverse, plus some kind of injunction on Musk’s tweeting (probably couched as “direct public communications”), plus a fine. There would be no disgorgement because Musk did not profit from the tweets (he did not “pump and dump”, which weakens the SEC case from a punitive standpoint).
Also, IMHO, the defense should particularly underscore that short sellers are not investors, should not be considered investors, and that company officers not only have no obligation towards short sellers but have, by definition, the fiduciary duty to act against the interests of short sellers.
I’d suggest reading the entire lawsuit carefully. It only mentions short sellers as a possible motivation for Musk to do the exercise — it otherwise mostly points out that Musk never checked whether _all_ current investors could actually remain investors after going private before stating several times they could (they can’t, since the overall number is limited).
Indeed; and they did successfully in the Theranos case. That was on such a completely different level though, asking for the same relief here is absurd.
Along with certain statements made at the press conference, I can’t shake the feeling the SEC is more interested in making an example, than actually protecting the interests of Tesla shareholders… And going by some of the questions asked at the press conference, I suspect I’m not be the only one thinking that the SEC might be overreacting here.
Needs to be criminal cases against shorts and againt SEC for corruption
MMF, That isn’t what the United States District Court Northern District of California says. The judge in Wochos v Tesla dismissed that civil suit in part based on the precedent from Binder v. Gillespie, 184 F.3d 1059, 1063 (9th Cir. 1999)
“…To state a claim under § 10(b) and Rule 10b-5, a plaintiff must allege (1) a misrepresentation or omission of (2) material fact (3) made with intent…”
This is just another civil suit as far as this precedent goes. Rule 10b-5 fraud rules simply are NOT a hammer to be used against companies unless there is proven INTENT to commit fraud.
Under Section 10(b), intent is not required.
You should read Wochos v Tesla dismissal, where the judge quoted Binder v. Gillespie:
“To state a claim under
§ 10(b) and Rule 10b-5, a plaintiff must
allege (1) a misrepresentation or
omission of (2) material fact
(3) made with intent”
True.
Somebody is in some Deep DooDoo,
Watch all the fanbois freak. hahahaha
Yes, let’s delight in the suffering of others.
Suffering? of fanbois? Well, I think there is very little compassion for fanbois…
I do feel for Elon. He was so stressed and so compassionate about his company that he feels like he has to defend it against haters all the time. But he should have just stayed off twitter and worked on burning shorts when Tesla delivers with actions.
Longs who bought high were deeply hurt by this attempt at market manipulation. No one should delight in their suffering.
Except we all know it was not an attempt at manipulation.
It’s not the intent, it’s the effect of the false information (funding secured) that he stated as fact.
…or the suffering of gleeful sycophants?
Our justice system is so effed up, if they do get him he’ll pay a get out of jail fee and a slap on the wrist.
Freak hell yes I’m gonna buy more Tesla now that it’s on sale.
I would wait a little longer, for a couple weeks probably
It’s already recovering. Minimum $500 by year’s end.
Probably just short covering. Nobody knows where the stock will go tomorrow.
The stock is down roughly $40 in after-hours trading. I think we have a pretty good indication of where the stock is gonna go tomorrow, at least initially, on this news. But with end-of-quarter results coming soon, and quite possibly Tesla showing a net 3rd quarter profit, I doubt it will stay down for long! As Ron M already said, this might be seen as a good opportunity by real (“long”) investors to buy more TSLA stock.
Shorts drive the thinly-traded after-hours.
And who are Ron, Pluto and Chano?
Yeah, this is a dangerous stock for longs or shorts right now. If you’ve made money, take it and run. Shorts have the advantage now but if Tesla settles with the SEC out of court (which is by far the largest percentage of cases the SEC brings), they will get crushed just as suddenly as the longs have today.
I hold no position and don’t plan to. It’s just too wild. Everybody has been burned at one point or another.
Yup! You would have to be either very fearless or very stupid to invest in TSLA either long or short, at least for a few days until things settle down… or at least as much as they ever settle for this highly volatile stock.
That is where dollar cost averaging comes in. Instead of betting on a single event or a single day’s price, you slowly buy into your position where you are betting on long term success (sometimes measured in decades).
You expect more bad news?
There will be good news; there will be bad news. Both are inevitable, both in the short term and the long term.
As a GM fanboiee, did you freak when GM plead to criminal charges in the deaths and grave injuries of hundreds of people, and agreed to pay nearly a Billion dollar in fines, plus another roughly billion dollars in civil suits?
https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-criminal-charges-against-general-motors-and-deferred
Hopefully, whatever the outcome, Tesla can continue transforming the auto industry.
Yeah look at Ford and GM lawsuits up the wazoo, and many deaths, people maimed, laid at their doorstep, but no one thinks they are going away anytime soon.
This, Spoonman! I like Musk and respect him a great deal, but he has been making some silly errors that have hurt Tesla. The big thing here is, let Tesla be Tesla. Help it to grow and transform the face of light duty automobiles all over the world! And semi’s too!
The company will survive for sure. But Musk may have to resign. I suppose it would go to Straubel.
They will. This will get settled with a slap on the wrist & a fine. But expect the shorts to try to hype it up like crazy.
WSJ claims they had a settlement worked out and Musk scuttled it at the last minute.
SEC doesn’t have criminal investigation capability. They can refer the case to DOJ for that.
SEC can levy financial penalty and prevent him from holding executive position at all public traded companies.
Maybe the best way is to settle with SEC.
If that doesn’t work, Elon can always resign and work as a “consultant” or just another “engineer” at Tesla. =)
DOJ is already investigating, it was announced a while ago.
And it isn’t just his personal problem, he was acting as CEO and Chairman of the company. I.e. civil class action lawsuits for all the market volume after the 420 tweet will cost the company really serious money when everything will be completed.
SEC didn’t file suit against the company, though. That’s important.
If you say so, it can’t be true.
And shorts that pay for lies in the media to profit from the lies aren’t liable?
No, since they aren’t part of the company executives. Anyone can say anything about a company. Company can sue for defamation. But when the executives of a public traded company speak, they are held to the SEC rules. That is the price for a public traded company.
“No, since they aren’t part of the company executives. Anyone can say anything about a company.”
Seems to me than an organized attempt to defraud investors by using FÜD-filled “articles” from “analysts”, and FÜD spread on social media; an organized attempt to manipulate stock price, should be prosecuted as fraud, no matter who is doing it.
Everyone is entitled to his or her honest opinion, even if it’s wrong. But FÜD isn’t merely wrong, it’s an intentional disinformation strategy, and fraud is fraud.
That is incorrect. All of the people involved with running funds that short Tesla (you know the names) ALL have to follow the exact same SEC rules. They can (and should) be held liable for their actions by the SEC.
If the DOJ intended to file criminal charges the DOJ would have taken the lead. They coordinate on these issues.
The SEC action effectively proves that the DOJ didn’t see evidence of criminal acts. We will actually never get an answer on that since they never actually made any public statement and won’t now
Although SEC and DOJ do coordinate, they don’t always file simultaneously. SEC charged Elizabeth Holmes three months before DOJ filled criminal charges, for example.
Maybe you missed it, but the DoJ requested related docs from the SEC a week ago. Supposedly, that means there’s likely to be a criminal investigation (otherwise the DoJ wouldn’t have a reason to be involved). Obviously an investigation doesn’t in itself mean anything, and I don’t think Musk had any crimes in mind.
https://www.cnbc.com/2018/09/18/tesla-stock-drops-after-company-reportedly-to-face-us-criminal-probe-over-musk-statements.html
I didn’t miss it. That is a separate article. this one is about SEC. SEC itself doesn’t have criminal prosecution capability. DOJ does.
I don’t read that as the DoJ requesting docs from the SEC?…
This requesting for documents from SEC was mentioned in many newspapers (Bloomberg etc…) , because DOJ don’t want to get active in parallel when they can get SEC do the heavy lifting first.
You are right that the DOJ requested docs, but you are wrong on the timeline. What was announced a week ago, was that a month earlier the DOJ asked for docs.
The settlement offer should be Elon stays off twitter/insta/whatever social media for one year. I think it would benefit everyone.
He’d just start a Twitter competitor. Exponentially better!
But that would be silencing Teslas PR, why not silence BMW or Exxon?
If BMW and Exxon executives lied about taking their companies private at whatever price, they should/will be charged by SEC as well.
I’m not sure whether Musk is providing positive PR at this point. Also an argument can be made that he shouldn’t be wasting so much time pissing around on Twitter anyway. He must have something better to do. A separate Tesla Twitter account could also be established for PR purposes if it doesn’t already exist.
But he would still call ALL the shots. No one else has a clue about future strategies.
A settlement is exactly what will happen. They are not going to stop him from being an exec because of a stupid tweet.
I argued for a settlement from day one, but it looks like this is going to trial.
Yes they should get new boards members in there. Those are lackeys and Elon needs help they not doing it for him
SpaceX isn’t publicly traded, so SEC has nothing to say about that.
Sorry that never going to happen I think petrol radically underestimates the desire of people who think to be rid of petrol. Like it or not Musk is still one of most influential people on the planet, there is no equivalent CEO or board chairman and he has credibility which is something people like Trump and a couple recent SC picks don’t.
So why are the shorts’ lies, that destroy huge value, go unremarked and unpunished? Get real.
Because they are investors or speculators. When you are company executives, you are held to the SEC rules. That is the price of public traded companies.
This is not about the short sellers at all, this is about Musk and Tesla. Musk and Tesla made this mess all on their own. Now its time to man up and suffer the consequences. If the SEC has its way then that will be the end of Elon Musks career as Tesla CEO and Chairman of the Board…
To be perfectly honest, I think this might be really good for Tesla, now they really need someone who has the operational capabilities to lead a multinational, multi-billion dollar company and who has a proven track record on delivering results. Tesla needs to turn profit, that certainly is not up for debate.
Luckily there are a number of really good and charismatic leaders across the world, personally I would most certainly want to see someone like Donald Walker from Magna International for example
The SEC made it pretty clear that the don’t consider announcements on Twitter different than other media.
There is no doubt that Musk has broken a bunch of rules with his misleading statements. I have a hard time believing though that the courts will find it to be as serious as actually faking earnings…
There is a 23 page document from the SEC embedded above.
So if no misleading intent – then definitely gross in_competence is obvious when :
(1) claiming “funding secured” after a loose 30-45 minute talk with Saudi’s without any % agreement, no price offer, no timeline, no firm commitment etc…
(2) When claiming “shareholders agree” after 2 Twitter users (holding 5 ? , 10? shares ????) are interested to keep shares
(3) Without any talk to large scale investors (pension funds, stock retailers) if they can invest into a private company
(4) not knowing that a private company can’t have thousands of small shareholders
(5) not talking to investment banks or legal advisors for a proper ‘take private roadmap’
(6) not asking the board for approval for such an utmost change of corporate set-up
(7) violating NASDAQ and SEC rules of public disclosures in midday trading
……….
That will be the main points of SEC why Elon Musk is seem unfit to be a CEO of a public traded company
Fact is he can plead gross incompetency : ) But that’s a shareholder case, not a SEC case.
No financial firm will lend money to TSLA now. Apart from Elon’s problems this could have dire consequences for the company. Maybe Apple will buy it.
Cool story bro.
Great reason to take it private.
Tesla’s staff lawyers will give them hell.
I hope Elon files a big ass counter suit.
Yea, For Stock Price Sabotage
I think a lot of the comments here are seriously overstating the seriousness of this suit — the anti-Tesla smear campaign brigade smells blood in the water.
But what in the world would give you reason to think Elon Musk has standing to counter-sue the SEC? I don’t see any basis whatsoever.
To waste their time like they doing with his.
Total corruption.
it will now go private, via Ch11
Lol
No they will not Shorty.
*Slow clapping* @Darn.
Tesla the company was not named in the lawsuit, only Elon.
Yes Apple needs a car company
I don’t believe Apple needs anything.
I seriously believe that project titan is still alive.
Regardkess they definitely have enough money to buy Tesla no doubt about it.
If Amazon buys FCA, which on the chopping block from my sources in Toledo, then Apple needs to get into the game
Apple “needs” to get in the car making game like a racing boat “needs” a battleship’s anchor.
It’s said that Apple has a lot of ready cash. Well, if it wants to get rid of that, then investing in an auto making business would be an excellent way to do it!
If Apple produce a car, it will not compete with Tesla. It does not have AP.
Why would this affect Tesla’s ability to raise money?
It will be almost impossible to raise money in a public offering with fraud charges pending against the CEO. Tesla could possibly do a private offering. More likely, Musk would take a leave of absence until the suit is resolved.
“No financial firm will lend money to TSLA now.”
And tomorrow, a Hell-Gate will open up under Tesla’s Fremont plant and rip it apart — one is about as likely to happen as the other. 😉
P.S. — “Tesla” is the company; “TSLA” is the stock. I’ve noticed that short-sellers like you tend to confuse the two.
So essentially, if Mr. Musk cannot sufficiently prove that he did not violate the SEC codes, he will no longer be in charge of Tesla (or any other publicly traded company). Since his style of leadership is aspirational and inspirational (i.e. “let’s do this thing no one thinks we can do”), I wonder what could happen to Tesla if he is replaced by a more pragmatic leader.
A ‘real’ CEO would be a plus. Elon can be the visionary/evangelist.
If you are annoyed by him now just wait till he is free of SEC regulations. From an unofficial position he can take Tesla private every week.
No, there are specific rules for anyone announcing a tender offer whether they’re and insider or not.
That’s if the SEC wins the case, of course or Musk settles (I expect he will).
Even if they don’t win Elon has demonstrated CEO is not a good use of his time or a good fit.
That’s just not true. Despite some temporary setbacks, ever since he took over as CEO, Tesla has been wildly successful. He’s not above making mistakes; be he is clearly doing a very good job on the whole.
Quite true. Gotta hand it to the FÜDsters — as they say, “Give the Devil his due” — they have managed to distract most people from considering how remarkably successful Elon has been at guiding Tesla to an astonishing degree of success, and growing the company at an even more astonishingly rapid rate of speed! This despite an almost universal prediction among analysts circa 2008-2013 that Tesla would very likely fail.
Elon Musk is an entrepreneurial genius, and becoming a self-made billionaire was no fluke or stroke of luck.
Why would the SEC settle? This is egregious and they want to make an example out of him. Otherwise, the SEC looks impotent.
“…they want to make an example out of him.”
You have confused your own deep hatred of Tesla with SEC policy.
Truth ❗️
Removing Elon would be good for Tesla. If anything, this good news for the company.
Hardly.
He is the brains behind Tesla.
The vast majority of investors do not seem to think so.
Without Elon’s passion Tesla would not exist!
Investors seems to be split : Some want a professional financial literate CEO – others want to keep ‘the face’ of Tesla at all cost at the helm.
So maybe a workaround : Removed as CEO, but Musk can be consultant, Chief of R&D, strategist, visionary etc… but not the head honcho doing financial announcements.
For an example of what a “professional financial literate CEO” does, see Apple. Scully and Amelio had Apple all but in Chapter 11 by 1997. It took bringing back Jobs to save the company.
Going by what the SEC said at the press conference, I do think they actually want to make an example out of him.
And I want to see an example made of the shorts, a criminal prosecution and same for the SEC. This thing is way bigger than the SEC or Wall St. this is about survival. And its about principle, enough of liars calling the honest liars.
You clearly don’t understand the SEC rules. You should read them before whine about what is fair or not fair.
yes, shorters are haters. But short isn’t against SEC rules.
The SEC has looked impotent since 2008. They did NOTHING before or after the 2008 Crash.
That said, Musk really put his foot in it.
I said from the start he needs to settle ASAP. Musk’s statement shows he’s not willing to settle on an terms the SEC would find reasonable.
Should not settle, should investigate and then seek the removal of the officers at the SEC. Follow on President can seek their prosecution. His 23 million twitter follwers need to use politicians to kill this with a very simple command: fix this or I will work to remove you from office.
The point of Tesla is not to make money for fools its first and foremost to kill petrol slavery and end the reign of people who think they have a right to profit from poisoning others.
Sorry, but that is marketing…
When Tesla became a public company they are essentially required by law to maximize their profit within the law…
In the land of demonocracy the majority of the people being poisoned want bigger ICE trucks and bigger ICE SUVs to poison themselves and their children some more…
Sadly the reign of people who support ICE is the vast vast majority and only straight up cheaper sales prices will change that…
First Martha Stewart and now this!
🙃
As a reminder, Martha Stewart wasn’t sent to jail for insider trading. She was sent to jail for perjury, for lying under oath during an investigation of her stock trading.
And her company was never ever the same.
What a shame.
Elon wasn’t charged with insider trading, either, but they’re both examples of high-flying egos who think they are above the law.
To some degree I don’t think you can be a Elon Musk without some sort of ego.
Unfortunately being reactive is ego based and sometimes it gets the best of us all.
“Ordering that Defendant be prohibited from acting as an officer or director of any issuer
that has a class of securities..”
Retirement secured!
DOJ in followup criminal case may ask what size of orange suit he wears though… 🙁
Get an XXL jump suit for the POTUS he’s guilty on so many levels.
I wish. It’s hard to imprison a sitting president. They didn’t get both lying Clinton’s
Hillary was a “sitting President”?
Right-wing fever dreams getting even more vivid these days…
Another missive from the hard-right wingnut bubble world!
Back here on planet Earth, Hilary has never been President… very unfortunately, considering the wholly unfit clown we wound up with!
No but she wasn’t unfit either #crookedHilary
I voted for my Governor in the primaries Kaish from Ohio. Moderate GOP and hated foe of orange 🍊 clown 🤡 trump. He didn’t even go to the nomination in Cleveland because the scandals and didn’t want to Associate with Trump. Voted for Crooked Hilary in the General
You parrot the Orange Wannabe Dictator quite well. Polly want a cracker? 😉
No but First lies his butt and so did Hiliry
Go back to Breitbart you clown.
Time to sell Tesla to Apple…
Well for some reason my comment was deleted but going to say it again “Prison secured”
Give me more down votes😛😛😛. No. It’s 420 fine in millions
Sounds about right! 😀
Maybe you should clue in as to why it was deleted in the first place.
Hey, there’s an idea!
A few things that matter:
1. SEC filed against Musk personally, not Tesla or any board members. The company and board didn’t do a great job of immediately distancing themselves from Musk on this, but apparently their efforts and subsequent cooperation were enough.
2. SEC filed civil charges without waiting for DOJ. I wouldn’t read too much into this, but the two agencies do work together and often file simultaneously. At minimum, this means the DOJ does not yet have enough evidence to proceed.
3. Discussions between SEC and Musk did not lead to settlement. IMHO Musk is being extraordinarily stupid by not settling immediately. He’s a bet-the-ranch type of guy, though.
4. Some details in the suit, such as mention of short burn Tweets and 420/Grimes are bad signs.
Despite this being an open-and-shut case, if it goes to jury trial Musk will have better lawyers and celebrity charisma on his side. If he really wants to fight this, though, he needs to take a leave of absence. Otherwise he could drag the company down with him.
” if it goes to jury trial Musk will have better lawyers and celebrity charisma on his side. ”
That is true. But civil suits only requires a majority.
Settling before a case was filed? Is that something that actually happens?…
Well of course it does, and frequently so in civil cases. Threatening someone, or some company, with a lawsuit, is often sufficient to bring them to the negotiating table.
After…
There would be nothing to settle otherwise.
I’d guess the SEC settles 95% of cases before filling charges. Maybe 98%. WSJ says they had a settlement ready to file this morning (on Kavanaugh day, no less!) but Musk bailed at the last minute.
Yes happens most of the time in the USA, even in your home city Berlin “aussergerichtliche Einigung” is possible. This get a lot of load removed from the courts.
Golden rule : do not speak about ongoing investigations and cases ….
As InsideEVs remarkes “” Neither the SEC nor Tesla/Musk can comment on this due to it now being an open, official lawsuit. ***UPDATE: Scratch that. “”
This is a NO-NO , never comment on open cases, and never criticize a government organization for doing their job in an ongoing case !!!
And as you already recognized : the SEC mentioned several times the “burn the shorts” before the Aug-7 funding secured tweet, later on Aug-7 in several more tweets ‘shorts’ take the center point, also before the call-off tweet 2 weeks later — shorts are everywhere ….
The SEC focus is on false claims and unprofessional behavior (just loose talks as basis of “funding secured”, no background check on large investors ability to go private etc…) so it’s really scary SEC is mentioning the ‘shorts’ so much – because the DOJ criminal investigation is piggy-riding on this SEC case, also the several class action lawsuits will get a boost if the SEC case ends “guilty as charged”.
Well, now there is a reason to take Tesla private for sure!!!!
LMAO………so right!
Not sure how serious you comment is; but I was thinking this as well: if they SEC gets their way and Musk is banned from leading a public company, would that make investors more open to taking the company private, so he could continue leading it?…
While I am certainly not a “financial guy”, at the same time, I can’t see this being an argument likely to persuade any investor: “Hey, we know you were previously against Tesla being taken private, but now that Elon Musk has been banned by the SEC from being a corporate officer of any publicly traded company, won’t you please reconsider so he can remain as both Tesla’s CEO and Chairman of the Board?”
Hmmm… no. Just no.
Many of the big investors are financial companies like Fidelity which are not allowed to own non public companies on their investors behalf. I think a lot more cash would have been required to go private than Mr. Musk may have imagined because those shareholders would have to be bought out.
The ‘taking private’ always made a lot of sense for
(pro-1) keeping the peace from short-attacks,
(pro-2) avoid strict SEC rules what a CEO can twitter,
(pro-3) enable long term strategy without quarterly reporting pressure with end of quarterly panic
But (contra) getting Bonds and new stocks issued for a public traded company is much easier for funding.
So when you are offering to buy the 80% ($50-60 billion) from the other stockholders for a reasonable price then TSLA can go private.
The best thing Tesla could do for themselves is Elon specific….NO MORE TWITTER!
Maybe Twitter could be sued, for creating a platform with such tight character limits, leading people to think in broken, terse, sentences?
No. He needs to shut his face.
Take responsibility for his own actions.
Sadly, I can’t be sure you’re kidding. :-/
The best thing is to find a common ground with SEC and settle. Pay a large fine and then plead ignorance and drop the removal clause. That would be the best for both Elon and Tesla. The sooner the better to reduce more pressure.
Or another way is just to take Tesla private asap so even if Elon is barred and he can still run Tesla as a private company.
And in one simple stroke, an overreactive abuse of regulatory law, the SEC has answered the wishes of ICE car makers, Big oil and all the heavily committed shorts out there. They have crashed the stock by design and intent. I wonder how much payola was involved. Must have been in the tens of millions for such a sweet, massive, rescue of the shorts. How many billions in T market value did the SEC just destroy?
You’ll be pleased to hear that I found a portion of the complaint to be factually inaccurate: it plainly states Musk was a founder of Tesla Motors. Clear as day!
About 5 billion, it seems…
While I agree that SEC is overreacting here, accusing them of corruption seems seriously paranoid to me.
Yup. We certainly are seeing a lot of corruption in Washington, but I see no reason to think that extends to investigative agencies such as the SEC, despite the Orange Wannabe Dictator’s unending stream of fake news attacks on the FBI and our various intelligence agencies.
The unprecedented speed at which SEC is moving on this is a reason for me to suspect that ulterior motives may be at play here.
Methinks you imagine too much, but the tweet did cost many people a lot of money. Those who sold on the price bump made money and of course are not complaining.
The SEC complaint seems to be factually inconsistent and not well thought through with multiple gaping holes and contradictions. I am not going to dissect the whole complaint; however, I mention just a few points. For example SEC claims that “unless restrained and enjoined [Musk] will violate again, Section 10(b)…”. The SEC is going to have very hard time to substantiate this claim unless they can prove that the SEC was and is capable of predicting Musk’s future behavior. As such, the SEC statement is just a pure conjecture. Additionally, SEC appears to be taking side with short sellers which is troubling on multiple levels. Finally, the timeline of events leading to the 8/7 tweet, as outlined by SEC itself, only proves that Elon is very transparent with his thoughts and plans, and that his behavior is consistent with his beliefs and management style, which is hardly a crime.
Thanks for your thoughtful analysis. I wish we saw more comments like this!
There was a settlement offered from SEC, but Elon Musk brash declined, so the case was filed.
You should never comment on an ongoing case, but Elon Musk did criticize SEC for enforcing its rules.
So do you really think that showing no remorse, no feeling of guild for violating rules, and criticizing the SEC law enforcers in an ongoing case …. are all signs that he will NOT violate the same rules again ?!?
Reuters noted that it’s highly unusual for SEC to move so quickly with a lawsuit, usually it takes over a year to prepare. This jibes with the notion of an ulterior motive like siding with shorts or trying to disrupt the disruptor on behalf of the disrupted.
Meh…this was a dumb tweet by a CEO/Engineer that isn’t good with Securities laws. It was wrong for him to tweet that. But this will be settled and everyone will move on.
But expect shorts to try to make this into the crime of the century.
It surprises me that you use Meh being a lawyer.
Thumbs up regardless!
Sounds like a good buying opportunity tomorrow with sales numbers coming out next week.
1) This will have no direct impact on Tesla financials, as Tesla is not a party and would not owe any fines. Tesla will still be building sweet EV’s that the market can’t pretend will go away just because of this civil action.
2) The suit calls for Musk to forfeit to the gov’t any profits he made, but doesn’t provide any support for Musk having ever made any profits on this. That is a complete oddity in a Rule 10b-5 civil case.
3) These are the allegations, not the judgement, and we have yet to see the defense. On just first read it is easy to spot contradictions in the allegations.
No Elon = No Tesla
You are correct.
Without his leadership the passion will not be the same.
SEC timing is peculiar, 3 days from end of Q3. Trying to cloudy up the news of total sales #’s of Q3 next week. Stormy waters, yes, but the ship will keep on sailing. Just saying.
Reuters noted how surprisingly quickly the SEC is moving on this, unprecedented. Seems to me that destruction of a company that has disrupted too many interests worth many billions of dollars rather than justice is the real goal here. Time is of the essence, Tesla is still vulnerable as long as it’s dependent on the stock market for funding operations, once Tesla starts making a profit things will get that much more difficult. The strategy appears to be working with TSLA in free fall again.
Reuters as the good little stooge of the vested interests it is like most news outlets made a point out of projecting a stock value without Elon that’s 3/4 lower than current which would be helpful in any agenda to destroy Tesla or make it vulnerable to a take over by parties that may want to curb its disruptiveness.
That said: Elon Musk did make it easy for his enemies….
His initial plan was to take Tesla private, but after listening to the opinions of several shareholders he had canceled his plan.
Would the SEC also have decided to take this action if Elon Musk would not have decided to cancel the initial plan to take Tesla private?