
Musk Faces U.S. Contempt Claim for Violating Accord with SEC - pulse7
https://www.bloomberg.com/news/articles/2019-02-25/elon-musk-faces-u-s-contempt-claim-for-violating-sec-accord
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toomuchtodo
Earlier thread:
[https://news.ycombinator.com/item?id=19250552](https://news.ycombinator.com/item?id=19250552)

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dalbasal
In fairness, musk is obviously contemptful of the sec, and public market
norms/institutions generally.

He should probably find a way to exit as Tesla ceo, imo. Being a public
company CEO doesn't suit him.

He built a car company from a cold start, made good cars, and pushed EVs
forward by a good many years. We're now at the point where most major
manufacturers make EVs. People are willing to buy them. Range is getting
sufficient. Plans to start banning ICE cars next decade are getting serious.

Job done, and done well. Get a CEO that does platitudes to run Tesla.

Go do spaceX, boring companies, hyperloop... plenty of stuff to do. Plenty of
money. Plenty of private investors willing to fund muskco projects.

This Elon Musk Vs the stock market stuff is not going to be fun for anyone.

~~~
short_sells_poo
> Plans to start banning ICE cars next decade are getting serious.

This made me think: many cities already ban cars from their centers, but
perhaps a better policy would be to ban ICE cars? Air quality and noise levels
could improve dramatically, but the impact on commerce wouldn't be as harsh
perhaps?

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mijamo
A lot of air quality problem in cities comes with tyres and brakes. This is
why the air quality is so bad in metro stations even though thzy are fully
electrical as well.

In addition, the policies against car are not only pollution related but
quality of life related and urbanism. This is why in many places in Europe you
can't build open air parking in cities anymore, it just takes too much of the
public space and if yoj want life in the cities you need to be able to walk
easier.

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modeless
Electric cars hardly use their brakes at all due to regenerative braking, so
that problem is solved too.

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cptskippy
They use them less and regen primarily alleviates the need for brakes to
perform speed modulation when cruising. They're still used for stopping and a
bad driver or rapid deceleration will still put excessive wear on brakes.

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modeless
> regen primarily alleviates the need for brakes to perform speed modulation
> when cruising

This isn't true for me. Maybe it depends on the strength of regen in your car,
but 90% of my deceleration when stopping is handled by regen. I only use
brakes under 5 MPH in most circumstances. And I wouldn't say I'm a timid
driver.

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cptskippy
How do you know when your car engages the brakes vs using regen? Are you
taking your foot off the accelerator and then waiting until the very last
moment to step on the brake pedal?

I know that Tesla's have aggressive regen, I own one, but it doesn't bring you
to a complete stop so you're using brakes at every full stop.

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modeless
Yes, I normally do not press the brake pedal until I have already decelerated
to about 5 MPH, when regen basically stops. I know that some cars
automatically apply the brakes as part of regen to make the transition
smoother but I'm pretty sure the Model 3 does not.

~~~
cptskippy
That's a long run out. I try to avoid annoying people behind me by doing that.

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kgwgk
Matt Levine:
[https://www.bloomberg.com/opinion/articles/2019-02-26/elon-m...](https://www.bloomberg.com/opinion/articles/2019-02-26/elon-
musk-keeps-tweeting)

"You can’t put Elon Musk in jail; he has a whole company for drilling tunnels!
Let’s be fair to Musk: On the one hand, absolutely, he has been going around
saying that he does not respect the law and is going to ignore the SEC and a
court order, but on the other hand he has also been going around saying that
he’s got a big drill. Also rocket ships, submarines, flamethrowers, possibly
flying cars, basically the whole arsenal of supervillain technology. The
message is not just “I do not care about the law”; it is also “and you can’t
stop me bwahahaha.”

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smallgovt
I don't see how he can reasonably defend himself in this situation. His tweet
was both material and inaccurate. Tweeting material information without
clearance is obviously against his settlement. Yet, if TSLA's price signals
anything, it'd be that he's in no danger.

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polishTar
> Yet, if TSLA's price signals anything, it'd be that he's in no danger.

Or Tesla is in no danger. Musk still might be.

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cronix
Seek counseling for your twitter addiction. Delete it. You don't need it. You
will be better for it in every way, Mr. Musk.

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rchaud
Your comment is slowly graying out, but this is the simplest and most obvious
solution. Of course, once Twitter is eliminated I think we'll discover that it
was the symptom and not the cause.

~~~
dylan604
I feel that way about all social media, not just isolating Twitter. Social
seemed to make narcissism accepted as the norm, and encouraged it.

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Tomminn
This is a partial transcript of the Q4 2018 earnings call. There is a strong
case to be made that the information was not market moving.

Operator

Thank you. Our next question is from Colin Rusch with Oppenheimer.

Colin Rusch

Thanks so much. Can you talk a little bit about the geographic dispersion for
the guidance for 2019, where you're expecting the Model 3s to sell through as
well as the other models?

Elon Musk

Well, I think we did, actually. Yes, it's clear in our letter.

Deepak Ahuja

We indicated in Q1, we will start delivering Model 3s in Europe and China. And
we also shared a chart showing the potential market size for midsized premium
sedans in North America, Europe and Asia, suggesting those markets could be
even bigger. So I think that gives a good sense of where we'll be. And we'll
launch the right-hand drive version at some point to go to the other markets.

Elon Musk

Yes. Maybe in the order of 350,000 to 500,000 Model 3s, something like that
this year.

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kadendogthing
What generally happens moving forward? Let's assume he's "guilty" across the
board. So two instances of misleading the market, along with violating a
settlement.

Is there a fine? For him and the company? Does he get removed from the board?
I don't think jail is likely but, maybe?

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xkjkls
It will depend on the judge and circumstances, but given that Elon didn't seem
to be fazed by a $20 million fine last time, I could easily see a much larger
fine this time.

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Gpetrium
It seems that the more a high-profile individual spends time in social media
like Musk the higher the odds of making a misstep. Shareholders may want to
keep a closer eye on highly 'media' active CEOs.

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w8vY7ER
Was curious what their take was but had to bail on the site- what a horrible
experience even with uBlock

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Phlarp
I thought this comment was being overly-dramatic but after clicking on the
link it is exactly that bad.

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aboutruby
[https://outline.com/tHvr8P](https://outline.com/tHvr8P)

(I got "We've detected unusual activity from your computer network" with a
captcha.)

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thinkloop
This one feels a bit witch-hunty, the "500k" number he tweeted wasn't meant to
be some new accurate prediction, but a reiteration of their public position,
to make a general point about how quickly they've grown over the years.

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spenczar5
One of the burdens for securities fraud is "materiality" \- whether a
"reasonable investor" would have viewed the relevant information "as having
significantly altered the total mix of information made available."

Analysts were generally projecting 400k cars delivered. Musk, the CEO, the
ultimate insider, suddenly reveals that Tesla will sell _25% more cars_ than
people outside expected. I think it's fair to say that if that came as a press
release from the company, the mix of information _certainly_ would have
changed and people would buy the stock.

The SEC agreement was that he would pre-clear any material tweets with a
lawyer. He said in a TV interview that he wouldn't get his tweets pre-cleared,
and said "I want to be clear. I do not respect the SEC. I do not respect
them.” And then he tweeted material information on Tesla.

I think it's pretty fair to call that contempt of court!

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jsight
Keep in mind that both the statement and the correction came while the markets
were closed. This isn't about market manipulation.

This is about whether or not he intentionally crossed an arbitrary line by
vaguely restating previous official company statements in an unofficial manner
without complying with company policy on said utterance.

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spenczar5
Right, this is about contempt of court, not actual fraud, good point.

It sounds like you think "contempt of court" shouldn't matter. I think it
should. It's hard to have a society with rule of law if people ignore court
orders, even cool people like Elon.

~~~
jsight
Contempt of court matters, but it is also a high bar. It remains to be seen if
the court will determine that a fellow saying "I love the courts, I'm sorry
about the things that I said outside of trading hours" is in contempt.

My guess is that the SEC's definition and the court's definition will not
agree.

Before disagreeing with this, go back and read the terms of the original
settlement. A lot of people are talking smack (on both sides) about things
that aren't even in that agreement.

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spenczar5
I've only read the SEC's motion
([https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/ragxTxYi...](https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/ragxTxYirOxo/v0)).
I haven't been able to track down the court's final judgement document in the
settlement. That said, I don't agree with your portrayal here. The SEC's claim
is just that Musk didn't pre-clear the tweet, which was a court-backed
requirement in the settlement, which makes him in contempt of court.

The other stuff, like about the TV interview, is evidence that he's not acting
in good faith, so the court shouldn't cut him slack here - or, in the motion's
words, that he "has not made a diligent or good faith effort to comply with
the provision of the Court’s Final Judgment requiring pre-approval of his
written communications about Tesla. Less than two months after the Court
entered its Final Judgment, Musk publicly indicated that he was not serious
about compliance with this provision."

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frontloadpro
I got a feeling we are going to find out Elon does a lot of lying.

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ams6110
I'd say he does a lot of bullshitting. That's pretty typical for any CEO type
person.

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rchaud
Most CEOs bullshit by talking in broadly general terms so as not to get pinned
down on any particular issue. Musk seems to make stuff up on a whim just to
see what the Twitter feedback would be. Shocking to think that this is coming
from a nearly 50-year old man.

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dylan604
>Shocking to think that this is coming from a nearly 50-year old man.

Is it though? Personality types are not something that changes with age. Maybe
it gets toned down or more mellow with age, or it could get more extreme as
they become more comfortable/confident in doing what ever trait it is. Pre-
social, it might have only been notice by those in direct contact with an
individual. Now, it's made visible to the entire online world. Musk is still
younger than Trump, and he's not slowing down at his age either.

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kodablah
I guess the critical question will be: "If a public earnings report lists a
number range, then a tweet mentions a possible number within that range (using
'may'), is that 'material information to investors'"?

I can see arguments to both sides. If anything though in the modern world of
social media and the public's thirst for transparency, these kinds of stories
can be seen as just an additional thing to think about before going public
(obviously a very minor thing of course when making the decision, but still
notable).

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tempworker9000
> _s that 'material information to investors'"?_

The guy went onto national television, implied he would not follow the court
order, said he does not respect the SEC, then went ahead and broke the order.
How is this even debatable?

And let's not pretend that Tesla isn't already under scrutiny for absurd
forecasts (under the guise of uncertainty) that they do not reach.

