
SEC Sends Subpoena to Tesla in Probe Over Musk Tweets - Puer
https://www.wsj.com/articles/sec-sends-subpoena-to-tesla-in-probe-over-musk-tweets-1534366752
======
dunpeal
Musk's "funding secured" tweet was incredibly irresponsible. Subsequent
elaborations by Musk himself showed he had, at most, an initial expression of
interest by potential buyers.

That tweet is at best an impulsive, reckless, perplexing action by a chief
executive who should have known how to stay on the right side of securities
law. At worst, it's an emotional attempt to fend off, possibly even cause
direct financial loss to his many critics and short-sellers.

This doesn't look good for him. This is the key paragraph in the article that
makes it serious:

> The subpoenas indicate senior SEC officials have authorized a formal
> investigation of the company, a step up from the initial inquiries the
> regulator made to Tesla last week. The SEC opens formal investigations when
> it thinks a violation of law has occurred and that a probe is justified
> given the nature of the suspected misconduct and the potential harm to
> investors.

Unless Elon can suddenly show he had credible funding secured - contrary to
his own blog post of last week - this looks like a strong case for the SEC:

> “The release issued earlier Monday clearly raised at least as many questions
> as it hopes to answer. The probability that there will be an SEC enforcement
> action is, I think, quite high,” said Joseph Grundfest, a law professor at
> Stanford University and a former SEC commissioner.

> Other experts agreed. John Coffee, a securities and corporate law professor
> at Columbia University, said the SEC can credibly argue that Mr. Musk’s
> tweet last week, which caused Tesla’s stock price to jump 11% the day he
> posted it, didn’t give shareholders the full picture they needed.

> “This is a clear statement that he has nothing more than an expression of
> interest as opposed to a binding commitment,” Mr. Coffee said. “It will tell
> the SEC that they have a virtually open-and-shut case if they wish to sue.”

[https://www.wsj.com/articles/musks-tweets-on-tesla-buyout-
fa...](https://www.wsj.com/articles/musks-tweets-on-tesla-buyout-face-
scrutiny-after-saudi-disclosure-1534244400)

Besides the SEC, which can lead to both criminal and civil prosecution, there
are also civil lawsuits filed in this case - three of them so far:

[https://www.businessinsider.com/tesla-hit-with-new-
lawsuit-a...](https://www.businessinsider.com/tesla-hit-with-new-lawsuit-
alleging-elon-musk-manipulated-stock-price-2018-8)

~~~
ckastner
I still almost can't believe that he'd be _that_ reckless. He must have known
how such a move -- and especially the "funding secured" tweet (where he
doubled down with the going private certain pending shareholder vote) -- will
be received but the SEC.

Nothing gained, but instead an SEC investigation, numerous lawsuits, and even
more short selling than before.

~~~
bodas
If Tesla were a normal company, Musk would have been fired long ago. There was
that conference call when he just stopped answering questions because he
didn't like them. Or the "pedo" tweet last month when he decided to accuse
that diver of being a pedophile because he's resident in Thailand.

The only reason Musk was CEO long enough to potentially commit securities
fraud is that he indispensable to the company, _not_ because of his
suitability for the role. Tesla should definitely fire him now, but you know
what... I don't think they will.

~~~
dunpeal
This appears to be the case. One of the articles about the possibility of
Tesla going private mentioned most of Tesla's board members are Musk's
longtime acquaintances and friends:

> But it has to be a truly independent committee, with the ability to reject a
> deal, Mr. Cox said. “This becomes very problematic at Tesla” because many of
> the board members have longstanding relationships with Mr. Musk, he added.

[https://www.wsj.com/articles/musks-tweets-on-tesla-buyout-
fa...](https://www.wsj.com/articles/musks-tweets-on-tesla-buyout-face-
scrutiny-after-saudi-disclosure-1534244400)

The more I learn about this issue, the more it seems like a corruption of
capitalism: a celebrity CEO running a public company like it was his own
private playground.

You can see how the fantasies of "taking Tesla private" figure into this
puzzle.

~~~
mrep
You all make fair points but I definitely don't think it is "corruption of
capitalism". I doubt spacex or tesla would be worth nearly as much as they
currently are without him because he is a master marketer. They got tens if
not hundreds of thousands of people to line up to buy a car years off from
production. They also get people to work for them doing 60 hour weeks because
they love the mission that he is trying to achieve (source, my brother who
worked for tesla and did 60 hour weeks).

On "taking Tesla private", I don't blame him considering the mission each
company is trying to achieve will take a long time and spacex doesn't really
get much bad press much whereas tesla is constantly hammered which would be
demoralizing if I worked there.

~~~
dunpeal
> I doubt spacex or tesla would be worth nearly as much as they currently are
> without him because he is a master marketer.

Nobody said Musk wasn't a great entrepreneur. The problem is the way he runs
his companies right now, as a chief executive and major stock holder.

For example, the way he packed Tesla's board full of his longtime friends.
Tesla is a public company. It has a board for a reason: the board is suppose
to be loyal and beholden to the "public", i.e. the shareholders, _not_ to
Musk.

The board is supposed to be independent of the CEO. Indeed, it is supposed to
be able to independently assess and - when appropriate - supervise and
terminate the role of the CEO.

That is not happening because the current board is full of Musk's friends.

Had the board been independent - as it should be - Musk would probably be more
careful, or he'd risk being fired after previous infractions, and certainly
after this current one - bringing the ire of the SEC + multiple civil lawsuits
down upon Tesla and its shareholders for no apparent gain or reason.

Musk seems to be a great entrepreneur. His present failings as a chief
executive are unfortunate, and he is disappointing people who trusted him -
notably, his investors and shareholders.

------
makecheck
Has instantly-public texting with _no review prior to publication_ EVER been a
good idea? It really seems like the simple solution of requiring ONE other
person to OK a message would help so much. It would _further_ help if systems
had uneditable history logs so you know exactly how a message got out.

Examples of bad texts are widespread, from all over the planet, not limited to
companies:

\- Companies shaken up by impulsive tweets from an executive. (One person,
instantly public, no review.)

\- Remember Hawai’i receiving texts about a missile launch? (One person,
instantly public, no review.)

\- World leaders sending extreme messages that could frankly start a war. (One
person, instantly public, apparently no review.)

\- Reddit founder editing stuff because he got mad. (One person, instant
effect, no review.)

------
gammateam
If anyone likes financial entertainment with a dash of the absurd, Zero Hedge
was right on the money the same day he tweeted 'funding secured'

> "bankers close to Tesla have no knowledge of the buyout." Come to think of
> it, until just two hours ago, Tesla didn't either.

[https://www.zerohedge.com/news/2018-08-07/tesla-jumps-
saudis...](https://www.zerohedge.com/news/2018-08-07/tesla-jumps-saudis-
reveal-2-billion-stake)

~~~
coatmatter
It's doubly ironic that his apparent intention (or mere desire) to take Tesla
private has now only made the share price even more volatile. SpaceX aside,
he's really having an anti-Midas touch this year.

Can things possibly get any worse? (Is this a safe question to
contemplate...?)

------
westonplatter0
glad to see SEC acting in some form on this. While I hope Tesla succeeds, I
rational communication from Wall Street companies.

~~~
westonplatter0
__I __prefer__ rational ...

~~~
craftyguy
HN allows you to edit your post, at least for a few hours after you submit
it..

------
manicdee
Will SEC investigating this issue prevent the share acquisition going ahead?

------
angstrom
It’s not just the shorts that ought to be pissed. He’s intentionally tanking
his public companies so they can go private at a discount.

Pulled a similar maneuver with solarcity just before profitable revenue could
taint the red. Repeating the same shit with Tesla.

~~~
skybrian
So you think he's secretly helping the short-sellers?

~~~
angstrom
I think he’s fucked speculating shorts and bulls alike. His shit stopped the
squeeze triggered by the PIF news. Calls are basically options of an option.

------
staunch
Between this and his "pedo" comment I worry Musk is simply not sleeping
enough. Even worse, he may be taking drugs to keep up the pace.

I've been following him for 10+ years and never worried about his judgement
until these incidents. Taking Tesla private is probably the best possible path
because it would relieve a lot of the pressure on him.

~~~
bytematic
Doesn't he fly between 2 cities twice a week to be with his kids and his work.
Seems pretty crazy to me.

------
Puer
[https://outline.com/u2qNKA](https://outline.com/u2qNKA)

Outline link, paywall.

------
neonate
[http://archive.is/4pDPD](http://archive.is/4pDPD)

------
chmaynard
Musk is a brilliant entrepreneur, but he is also a charlatan and a terrible
CEO. The solution to this crisis is quite simple. The Tesla board of directors
should relieve Musk from his duties as CEO and, if necessary, remove him from
the Board itself. Disclaimer: My opinions only. I have no financial interest
in Tesla's success or failure.

~~~
sctb
Let's please resist the temptation to go another round of generic Musk-this
Musk-that.

~~~
GW150914
Is there any way to stop a substantive and interesting article like this,
which has as it’s only failing that it’s critical of Musk, not be flagged off
the front page?

------
vernie
If only he'd proposed going private at $420.69

