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SEC Asks Manhattan Federal Court to Hold Elon Musk in Contempt (wsj.com)
216 points by tysone 57 days ago | hide | past | web | favorite | 297 comments



At this point, the board of directors should just demand deletion of his Twitter account.

I admire Elon for his vision, and actually also admire his radical style despite of its unpopular image - I watched the video where he smoked pot on the radio show. It was a really amazing conversation about future of humanity. He just needs to stop tweeting. You may say it’s fixing the symptom, but here if we take Twitter away, he would stop yelling stupid FCC punishable things.

As a side note, Twitter has hardly done anything useful for the society. I never got into twitter and never understood its value. Conversations are one sided, blog posts are separated into incomprehensible chain of tweets, people are insulting with no repercussion - it’s a giant echo chamber of loud people. One thing it has done is to improve customer support by shaming companies publicly, which is a really sad state of affairs.


Twitter's value is providing a direct connection from people of note to the masses, bypassing newspaper/TV/radio gatekeepers of yesteryear. You could argue whether that itself is good for society, but it is clear from Twitter's usage that people find it valuable.


I find it valuable in that you can follow reporters directly, both professional and amateur, and curate your feed very precisely, especially because a large amount of commentary comes across as Tweet-sized asides, not full articles.

As a micro-publishing platform, it's hard to beat.


> because a large amount of commentary comes across as Tweet-sized asides, not full articles.

There are very few topics that are both worthy of a news story and able to be summarized even remotely well in 140 characters. It is literally the downfall of journalism and in my opinion is a major driver in the complete lack of rational discussion in politics today.


News stories often have little else in them other than their headline. Like, for instance, this one. 90% of the value of this is the headline itself.


Except that many reporters and journalist do the same (obviously there are good ones, not claiming yours do) and they end up being in the same bubble. To this add that journalist and media are twitter lifeline, so essentially they can bully the platform as they like.

A great example was the learn to code meme.


Why follow reporters instead of subjects they report on, collaboratively edited by many people?


Because your suggestion is theoretical while Twitter exists today.


Uh, his suggestion is a newpaper, magazine or other forms of publications these journalists work for. Except if you subscribe to the publication instead of the journalist, you get the benefit of the publication's editors.


The viewers of Fox News find it valuable as well I'm sure. That something's users find it valuable says little on its own imo.

This is a separate point, but what exactly does Twitter do to provide a direct connection to the masses that the rest of the internet doesn't? The only difference is that Twitter, through some combination of marketing, first mover advantage, addictiveness to the right audience, whatever, happened to what the developed world chose as its social media platform of choice for current events.

That's orthogonal to its actual appropriateness for being such a platform and to its utility to global/national society as a whole.


People definitely find it valuable but im pretty sure it isnt good for society. Influencers earn more followers for portraying psychopathic behaviors than they would for being themselves. And they definitely earn more money for themselves by portraying a lavish unrealistic lifestyle -- it only increases the quality and number of offers they get.


Twitter has both pros and cons but I’m convinced that it’s mostly cons.

Going off tangent again, but the same analogy goes with Facebook - it was nice to connect with people and see their updates until it became this rotten, ad driven, divisive tool. Remember FB restricted to college users back in 2005?

Maybe there is some kind of “aging” phenomenon with social networks. They all rot. MySpace, Digg, Reddit, Facebook, Twitter and coming up next - Instagram.


People find a lot of crazy and destructive things valuable.

I am not saying we should ban them. Just disrupt them.

Twitter is a combination of the worst things:

  Public shouting
  In very short form
  Attacks rise to the top
  No way to discuss the substance together
Each tweet is a short public shout that is an attack of something else and no way to discuss substance or solve anything.

No wonder society is overrun by outrage mobs and #hashtag movements.


Musk could accomplish exactly what you’re saying on a blog (just as Bezos did on Medium recently), or through a PR release written or approved by him. There are numerous ways he could communicate more effectively to the public without mainstream media filtering. Why do we act like Twitter is the only way to do this?

Twitter only encourages misunderstanding and posts without thought. The character limit is a big driver of this.

If Musk wants to take his company private then he can do whatever he wants, but there is a different set of rules for CEOs of publicly traded companies for a reason.


"Twitter only encourages misunderstanding and posts without thought."

I recently heard this described as removing context. Which made me facepalm. Obvious, right? (Sorry, I shoulda bookmarked it.)

FWIW, I think every public figure should hire someone to manage their social media presence. As in, doesn't a CEO have more important things to do?


There are lots of ways of accomplishing that without the things that causes twitter to be particularly toxic.


Twitter's toxic because they never clean the place up. It's like a hotel where they clean the rooms only when it gets so bad that the EPA or CDC issues a citation.


> Twitter's value is providing a direct connection from people of note to the masses, bypassing newspaper/TV/radio gatekeepers of yesteryear.

Press releases still exist. Although even then I'd wager the copy writers do a better job of legal due diligence than Musk.


It's not the same thing, however I do think CEOs having a direct link to communicate with the public is incredibly irresponsible; unless you keep everything extremely trivial, light, and unoffensive. Otherwise everything should be vetted and / or double checked by at least one even headed, conservative person (in terms of risk, not politics), who has some understanding of PR.


It is useful for self promoters and day traders, others not so much.


Relevant, Jack Dorsey was on the Joe Rogan Experience podcast recently, and in the first handful of minutes he talks about Twitter and its value[1], bad behavior on Twitter, misinformation, and echo chambers.

[1] https://www.youtube.com/watch?v=_mP9OmOFxc4


How about, "helped every piece of news break faster." I knew about every trade during the run up to today's 3pm NHL trade deadline many minutes and sometimes hours before the stories appeared on nhl.com or sportsnet, etc.


^ This

I recently read a group of high profile journalists (mainstream media) stating that "Twitter is where we get the news from"...

Twitter has become a sort of real-time news agency. If you follow the correct profiles in your niche/sector not even Reuters can beat the speed of 95% of the events. If there's a newsworthy event, chances are it's first on twitter than in any other media outlet.


> high profile journalists (mainstream media) stating that "Twitter is where we get the news from"...

Wow. This is unbelievably scary.

Imho news should be curated & not first to the wires. News should involve individual fact checking and less web of trust.

I understand how we consumers might want to listen to a journalist's feed, but journalists using it as a source too? It's nothing but a self referential feedback loop otherwise!

One word describes the problem: covfefe


Related (and I picked a tweet because that was the two highest google results for the phrase I searched):

https://twitter.com/freakonometrics/status/10205573001537044...


This is the inevitable long term consequence of click-based revenue. It does not matter if you get the story wrong, if you are the first to publish you still get the money.


Exactly.


> I knew about every trade during the run up to today's 3pm NHL trade deadline many minutes and sometimes hours before the stories appeared on nhl.com or sportsnet, etc.

Is that just for entertainment or did you use that information in some way?

It's similar to papers or tv stations crowing how they broke a story. So what? Do I really need (or do most people) to know that there is a mass tragedy (only one example) the minute it happens? It can't wait? Not everything that happens is '911' grade information.


> Is that just for entertainment

"just" is just your opinion

> Do I really need (or do most people) to know

I do.


> "just" is just your opinion

Reading the entire sentence makes it clear that "just" refers to whether or not they "use that information in some way", and that is not an opinion.

> I do.

You cut off "the minute it happens". It's not about whether you learn it, but how rapidly.


If you want to make money betting on the info, you do.

Breaking a story matters if no one else was looking, but yeah not of everyone was racing.


>helped every piece of news break faster

How is that a good thing? Without proper fact-checking it's just rumors. And there are a lot of instances of fake news spreading on Twitter before full information is available.


I enjoy reading about political news immediately but often times the breaking stories are wildly incorrect/off and I would benefit from more restrained and thoughtful coverage. Taking more time to make decisions rarely leads to bad decisions...


He doesn't need to delete it, but if he is going to post market moving information (like production for 2019 is not 400K but 500K) he'd get the approved by someone else like Tesla's GC.


Incidentally Tesla's new GC has only been on the job for 5 days after the previous GC left two months into the job.

https://www.cnbc.com/2019/02/20/tesla-replaces-general-couns...


It's possible this isn't a coincidence, the tweet in question seems to have come out just before the last GC left, I wonder if it sparked a conflict.


It seems like Elon lacks the ability to control his behavior when he can tweet based on a momentary impulse. Elon has many bright ideas but not every notion of his is appropriate for public consumption. He ought to hand over the credentials to a PR or even a law firm so he can send all his tweets through them. And ask them to change the password.


It wouldn't be too hard to give him a twitter clone app that flows through a middleman before going live, git pull requests for twitter if you will.


I've been saying for years that Twitter ought to be offering that as a paid-for feature. They don't even have to charge much for it. Even something as simple as "All tweets have a 120 second delay during which time the following users will be pinged, shown the tweet, and given veto powers on it".

I'd pay for it just to have my wife be able to say "Really? You want to tweet another picture of the cat? No."


I could see from an ideological perspective Twitter's entire mission being to delete the middleman and the moderating PR managers and public statement lawyer sanitation of everything public figures ever say, which was the only way laypeople heard anything a famous person ever said (that or tabloid gossip "overheard"s). I can respect that ideology, but it of course comes with its own set of problems.

Personally I'm amused and ok with famous people facing the consequences of voicing their opinions, and also them getting roasted by normal civilians in public thanks to twitter.


> which was the only way laypeople heard anything a famous person ever said (that or tabloid gossip "overheard"s).

I get that twitter main usage is this, but you can accomplish that with literally any social media/personal website.

What twitter really facilitates is seeing feeds from random people and famous people responses to other (famous or not) people.


Jack Dorsey just discussed this concept a bit in an interview on Bill Simmons' podcast. They were discussing the pitfalls of giving users (or others) the ability to edit/delete their tweets.

In discussing having a N-second window where a user can correct typos, Dorsey brought it down to a tradeoff between real-timeness and correctibility. Essentially he feels that much of Twitter's charm as a platform comes from the fact that updates feel "live", so every delay from tweet source to delivery needs to be given a heavy cost in the cost/benefit analysis.

Adding a delay like that as a feature (especially for a figure notable enough to move the stock market with a tweet) would undermine that message completely, by preventing that figure from engaging with the conversation in real time.


3rd party apps do this.


At this point they should seriously do this. Build a twitter clone app for a few 100k, and then hire an around the clock crew to review tweets as they go out. It would be 100% worth it.


More than that, it may be time to send him to drug rehab. We know drugs were involved in the last big screwup.


On the other hand, how is that market-moving given Elon's very public history of stirring the pot? You expect this from him.


I think for most crimes, saying "But I have a well known history of doing this" would make prosecutors less lenient, not more.


The legality is above my pay grade and will have to be deferred to the experts.

Just from an economic line of thought, even a cursory look at Tesla and Elon's history of public statements would make a reasonable investor think "Gee, the CEO talks a lot. Maybe don't read too much into it."


The entire point of this law is so you can get accurate information to decide on your investments.

Otherwise you (the investing public) are going to say "well he could have a great factory, or he could be spouting off again, guess I'll keep the money under the mattress."

It would make it very hard to raise money to do big things.


Have a good point, I didn't consider it that way.


On the other hand, unreasonable fans will listen and will move the stock, so a reasonable investor might want to pay attention.


No, you expect that a top representative of a publicly traded company obeys the law on official company channels. E.g. if your job is to trade on Tesla based on newly announced information, ignoring facts from such a message might very well get you in financial trouble if it turns out you shouldn't have ignored it and your clients loose money because of that.


Channels don't matter. Lying to investors does. Private company CEOs can talk shit as long as all the investors know it's shit


The SEC disagrees.


Then couldn't someone at Tesla council just say, yes we review and approved this tweet ?


Twitter is a giant customer service system.

It’s more effective than sitting on hold waiting for a giant company to ignore you.

One reasonable tweet about an issue and usually a customer service rep reaches out.

I tweeted about how a company saved Christmas for our family with a last minute furniture delivery. We were going to take a secondary choice on color for that item to arrive on time.

The CEO of the company got involved and we got the right color on time.

Company is LoveSac and they were great but wouldn’t have even know about the issue without Twitter.


I wish companies would enable whoever is manning their public emails to fix problems as effectively as whoever is manning the twitter account.


> Twitter is a giant customer service system.

Only if there's a good PR opportunity to be had, which is exactly the case you described.


I got my first job from twitter. I learn from the smartest people in SV sitting 1000s of miles away. Your twitter is an echo chamber. Mine isn't.


So apparently, Elon's twitter account is seen as source of official news about Tesla by investors [0]. Given that, it is reasonable for SEC to take this position.

But on a bigger scheme, it is sad to see this happening while "puffery" is legal and the damage it is causing is far bigger than anything elon's tweets have caused. https://www.youtube.com/watch?v=t0CyBv18A5k

0. This line is in the 2013 8-K filing by Tesla: "For additional information, please follow Elon Musk’s and Tesla’s Twitter accounts: twitter.com/elonmusk and twitter.com/TeslaMotors "


Puffery is a form of lying to consumers, Musk's problem is with laws around lying to investors.

“Capitalism” wasn't named “capitalism” by it's opponents because it protects consumers and leaves capitalists out in the cold.


I don't think he needs to stop tweeting. He just needs to make sure all the tweets that contain information material to Tesla are reviewed prior to publication, like he agreed to in the judgement.


I would rather he just let someone else handle Tesla and focus on SpaceX, Neuralink, and whatever other private ventures. He just isn’t meant to head a public company.


Isn’t one of Tesla’s problems that they don’t have an operations chief of the caliber of Shotwell? They essentially need their own Tim Cook - boring but dedicated and gets things done.


The rules never apply equally to everyone. Tesla needs elon and elon needs twitter to hype up millions of people so he can achieve his goals. I m not a fan of the guy, but he's got the resolve to make things happen. if you take away his twitter, it will be bad for the future of tesla.


I worry that if you don't take away his Twitter, it will also be bad for the future of Tesla.


As with most social media, what you get out of Twitter is largely a function of who you follow. Using it as a "direct connection from people of note" is using it exactly wrong IMO. That makes it just another megaphone for advertisers, politicians, and entertainers. Personally I find it much better to follow people whose ideas and perspective I already find valuable. Some I know IRL. Some I know from their work, or from blogs/forums including this one. Some I was "introduced to" by these others, in the sense of repeatedly seeing retweets or responses and finding them valuable.

I can get the news a bazillion different ways. I don't need Twitter for that. But I also enjoy seeing the reaction from the various communities of which I'm a part, from work to the ski club to the people I follow on Twitter or Facebook. Social media is much better when it's social, not broadcast.

Am I in danger of creating my own little bubble this way? Sure, as has always been the case with RL associations as well, and the remedy is the same as well - learn critical thinking, don't rely on any one of them for your information, etc. And even if each of my social-media "avatars" is in a bubble at least it's my bubble, the result of my own conscious curation and not someone else's idea of what bubble I should be stuffed into.


I used to find Twitter a really great outlet for my brain when I needed a 60 second break from a task, and no more. I kept my feed fairly sparse, and tweets were so short, so I could glance at my timeline without worrying about getting lost and losing track of time.

They have since slowly killed this value, by changing how the timeline is ordered, increased character limit, etc.


> the board of directors should just demand deletion of his Twitter account

That’s extreme. Just give the securities lawyer the password. Elon clearly lacks the discipline to work with pre-approval. So have him draft tweets, send them to the lawyer, and then watch them go live. He can read his feed but not write to it.


A part of the development of new Tesla car features, and the deal with Australian battery plant were happening on Twitter with his account. Closing it down would hurt Tesla. The solution is having a reviewer for each tweet, just how Elon and SEC agreed.


Odds are great that the battery thing on twitter was a PR stunt for public consumption, not substantive decision making. People don't negotiate infrastructure deals on twitter and email is just as good for actually doing business deals.

In the event that anything actually happened on twitter, someone was probably being negligent in terms of tendering and governance. It doesn't make sense for a few tweets to be critical, so they probably weren't.


It was PR, and maybe a stunt as well, but it worked. It put a huge social pressure on the corrupt Australian politicians who kept the electricity system in their country far behind what Australia can afford. The public actually deserves to take part in what their tax payments are used for.


Twitter is where the rich and powerful go to make complete fools of themselves.


It really only shames companies for the few customers who get attention too.


Basically, he needs a pepper pots.

Incidentally, I think we should have referendums (local, national, scotland..) to ban leaders from twitter. Maybe Jack Dorsey could be sold on this.


...Can a corporation demand an employee waive their right to speech as a private citizen?

I think even if so, that's a terrible idea.


Of course they can. Not only can you just fire your CEO if he says something racist, sexist, or generally embarrassing, but there are non-disclosure agreements (you promise not to tell anyone what happens in the last episode of Game of Thrones), non-disparagement agreements, codes of conduct that entail things you can say. Conan O'Brien had to agree not to appear on television, and not to say anything negative about NBC as part of his leaving the Tonight Show. Nike can tell its employees they're not allowed to wear Puma clothing.


Can a corporation demand an employee waive their right to speech as a private citizen?

Said citizen and his company avoided prison time and massive fines respectively by agreeing to said restrictions as the result of earlier fraudulent misrepresentations on a private account he demanded the corporation register as an official public account for regulatory purposes.

So...yes. Definitely they can enforce an agreement he voluntarily entered into for a medium he deliberately turned into a regulated source.


This is true for every employee of every public company on the planet. We're discussing it here because Mr. Musk thinks the rules don't apply to him.


Public? Every company in existence makes you sign a contract that you won't disclose sensitive company information, public or not.


Sorry that's simply false. You have all your freedoms. You can get fired for exercising them but that doesn't mean you don't have them. If the shareholders wanted to fire Elon Musk they would, but they aren't so the SEC should butt out of the issue.


_Every_ CEO of _every_ publicly traded company has _every_ company-related tweet vetted by a company lawyer. What the SEC is asking of Musk here is simply that he follow the industry-standard.

Let's not forget Musk owes a fiduciary duty to Tesla shareholders and his tweets have repeatedly lost shareholders money and induced people to purchase shares on false/misleading information. That's securities fraud.

Source: Corporate & Securities Attorney. I was once the approver of many such tweets. Though thankfully the people I worked with were exceedingly reasonable in comparison to Musk.

Edit: Missed a word.


You can’t lie about your company as a ceo. That’s securities fraud.


Elon effectively has controlling interest due to his supervotes. Sure, 89.5% of the outside votes can out vote him, but that’s an absurdly high bar. [0]

Also, the SEC is a regulator for a reason. Saying the company is cool with it (even when it’s really unclear if that’s actually true give the voting setup) is completely irrelevant to if the behavior is acceptable to society. After all, grifters are totally fine with gritting when they’re the ones doing it, but that doesn’t mean grifting a societal benefit.

[0] https://www.thestreet.com/investing/stocks/how-elon-musk-con...


I mean, I'm fairly certain that if I started publicly bad-mouthing my company and they noticed, I'd be canned.


Canned by the company yes, not canned by the government.


Government isn't canning Musk. They're fining him for releasing material misinformation about his company. This has been well established in the law.


Not misinformation, guidance was 350 - 500. This is a technicality of not getting approval for a tweet that could be interpreted as saying they are definitely hitting 500k 8 months from now. This is stupid.

https://twitter.com/_jameshatfield_/status/11001772987230945...


If he didn't want to be bound by the requirement to have all his tweets go through a legal review, then he shouldn't have agreed to a settlement with the SEC that required him to do so. It's really that simple. Doesn't matter if it's stupid or not; he signed a legally-binding court document agreeing he'd do it.


> If he didn't want to be bound by the requirement to have all his tweets go through a legal review, then he shouldn't have agreed to a settlement with the SEC that required him to do so.

A lot of people don't realize this is industry-standard. Any reasonable CEO wants to make sure they aren't inadvertently committing securities fraud with the send of a tweet.

Tweets being reviewed by the legal department are par for the course at any publicly-traded company.


In the time between Elon's two tweets, enough trades could have occurred based on the misrepresentation that investors were financially harmed.

The point of the SEC is to prevent harms like that. The point of the SEC's 2018 settlement with Elon was to prevent him from investor-harming tweets like the one he made by requiring tweets about Tesla to be reviewed for accuracy and correctness before posting.


> In the time between Elon's two tweets, enough trades could have occurred based on the misrepresentation that investors were financially harmed.

Does it matter that it was outside of trading hours?


After hours trading is a thing, money can still be made or lost outside of trading hours.


The parent comment says "Can a corporation demand an employee ..." so that's exactly what we're talking about. The company, not the government.


GP clearly asked about a company.


This is a common misunderstanding, let's recap the first amendment:

> Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech,

A civil contract between a company and individual does not fall under this at all. They could add anything to that contract and it is up to you whether you sign it. If a company demands you to walk to the office like someone out of Monthy Python's Ministry Of Silly Walks, they sure can. It's up to you whether you accept it. There are some explicit limitations to this (class discrimination, whistleblower protections etc) but beyond that, it's a free country.


1) Yes, unless it somehow implements protected class discrimination, whistle blower retaliation, etc. And you waive this every time you sign an NDA, discuss company internal info, read one of those "this email is intended only for its intended recipient" emails, contribute to FOSS with a Code of Conduct, etc.

2) I don't see how it's a terrible. Musk is breaking federal laws as CEO and putting the whole company in jeopardy. It's no different than a rogue firstline worker speeding down the road drunk in a company vehicle.


When he speaks with insider information from the company to an audience that will influence his personal position in said organization, he's not a private citizen.


Of course they can (and often do).


Of course not. But they can remove him if he uses his right to free speech to say stupid shit that gets the company in legal trouble.


Yes. You can get fired for the things you say off the clock, especially publicly. I don't love it, but what do you expect the company to do if an employee gets outed as a psychopathic troll?


Musk is salaried. There is no "off the clock," and that's inapplicable because he isn't being asked to do work or constrain his personal life. He can call people pedos and all that all he wants as far as the board is concerned. He just can't commit federal crimes in such a way that the company is liable, by voluntarily making false material statements about it.


It can even fire them for expressing a political opinion. Particularly if there is a twitter mob involved.


lack of impulse control has no relationship to having a twitter account..board needs to do its financial duty and remove him


[flagged]


You’re right - SEC I meant, not FCC.

I’m just speaking my mind, new to this site. Sorry to have disappointed you.


Twitter is decidedly on-topic since it is Elon's misbehavior on twitter that got him into this whole mess.


Twitter has hardly done anything useful for the society. Yes, but Facebook has done even less.


My knowledge of how publicly traded companies work is very limited, but:

Was what he said really that bad? He said:

>Tesla made 0 cars in 2011, but will make around 500k in 2019

And then later corrected himself with:

>Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.

This seems like a pretty simple mistake to have made, and I have a tough time assigning malice to it.

I like Elon. A lot. The news machine's constant thirst for scandal surrounding him is a cancer on our society, and it worries me that it then effects people who have the ability to enact their will with force: the judicial system.

edit: and it honestly just seems like an honest mistake. He likely is constantly thinking of ways to improve the weekly output of Tesla, and then expanding that in his head to yearly production numbers.

>Tesla made 0 cars in 2011, but will make around [/be at the correct pace to be making] 500k [a year] in 2019.


The legal point isn't if what he tweeted was "that bad" or not. It's that after he got caught the last time, in the settlement to end the case he agreed to have Tesla legal review all such tweets in the future to make sure he doesn't do it again. He broke that agreement.


i believe elon’s argument is that the offending tweet didn’t need approval because he believed that he was just restating a projection made on the previous earnings call


The SEC saw that argument coming and shot it down completely in their filing:

> According to Tesla’s Policy, any edits to a pre-approved Written Communication or even releasing a verbatim pre-approved Written Communication more than two days after it has been pre-approved requires that the pre-approval be reconfirmed. Even if the exact substance of the 7:15 tweet had been pre-approved 20 days before, Musk cannot credibly claim that he thought he was not required to obtain pre-approval again under the plain terms of the Policy. In fact, the written communication in the 7:15 tweet was not pre-approved 20 days earlier or at any time. Musk’s claim that he thought he was simply restating information from the January 30 communications is not credible.

https://www.documentcloud.org/documents/5750664-Show-Cause.h... page 12


This tweet was not an edit to a pre-approved communication. That rule is irrelevant.

The argument is not "this tweet got approved before, so I can edit it however I want". The argument is "the number is already public information, so I can make a new post mentioning it".


> This tweet was not an edit to a pre-approved communication.

That is the problem, in a nutshell: it should have been pre-approved - according to the FCC's interpretation of the settlement agreement.


Maybe. But don't confuse different arguments about why. If the tweet needed pre-approval, it's for a reason entirely different from this quote.


Whether or not it's a valid argument, that does seem to be the SEC's argument here.


It's not the core of their argument, though. It's probably thrown in just in case it could possibly be considered relevant.


In a contempt hearing centered around violation of the terms of the settlement with the SEC, that's probably not a great argument. It's an error Musk would not have made if he'd simply adhered to the agreement and had a lawyer review what he tweeted.


What he believes doesn't matter, it's what he agreed to that matters, and he violated that agreement.


[flagged]


You can use this argument for literally anything, it means nothing.

> Apparently we live in a country where the government can murder thousands upon thousands of innocent Iraqi civilians, deny that it ever happened, and profit off of the destruction.

> But god help you if you brutally beat someone to death


To be honest one of the reasons that government malfeasance of the kind that got us into Iraq is so dangerous is that it promotes exactly this kind of cynicism.

We’ll be hearing exactly this kind of argument for decades because of the shit trump is getting away with now, and he’s arguing he should get away with it because of the shit Clinton and Bush got away with.

It’s off topic, but a culture of law breaking at the top promotes law breaking at all levels of society.


The justice system is not single-threaded. It can deal with more than one case at a time.


The government profited? I always hear that it cost 6 trillion or something


government officials and connected firms profited, taxpayers lost out


If the government does one thing unethical, immoral, or in violation of international law, and that must necessarily result in all contracts being nullified as preposterous in comparison, then it's chaos.

What you're describing is an eventual consequence of metastasizing corruption. Wealth does not trickle down, but corruption does.


Yes but in this case he'd already said this publicly. Does Elon need to review tweets about things hes already publicly said?


Last year Elon made a series of deliberately false statements made with the sole purpose of artificially inflating the stock price of his crime. CEOs have gone to jail for years over misrepresentations less outrageous than Elons'. He was able to avoid prison time and hundreds of millions in fines by agreeing to a slap-on-the-wrist settlement with the SEC that required a small fine and, crucially, that his tweets be reviewed by someone else at the company before they were posted. So that no more material mispresentations would spew forth...like the one the SEC is now saying violates the settlement agreement.

If he wanted to keep tweet vomitting, he could have decided not to settle with the SEC last year and taken his chances.


He did no such thing. You are probably referencing a series of tweets where Elon was openly contemplating what would be required to buy back Tesla shares. The settlement with SEC clearly stated that no fault was found and no guilt admitted.

Why people get so excited about Musk spewing numbers over Twitter is beyond me, when the responsible course of action is to verify claims against other better vetted sources.

The crowd was eager to hang Elon over “funding secured” despite the entire deal being dependent on shareholder agreement.

The crowd is now eager to hang Elon over a typo.

I think it’s the crowd that needs to delete Twitter, not Elon.

Before you start discussing SEC rules remember these are all people who have been complicit in regulatory capture and they are all by definition the worst people for the job. They stood by while market manipulation was being performed daily through media publishing misleading stories in time to shake up morning trading. The SEC is corrupt to the core.


>He did no such thing. You are probably referencing a series of tweets where Elon was openly contemplating what would be required to buy back Tesla shares. The settlement with SEC clearly stated that no fault was found and no guilt admitted.

Yes, that's the "slap-on-the-wrist settlement" for Musk's securities fraud the parent was referring to.

>Why people get so excited about Musk spewing numbers over Twitter is beyond me

Because he is the head of a publicly traded company and spewing those numbers can violate the law.

>The crowd was eager to hang Elon over “funding secured” despite the entire deal being dependent on shareholder agreement.

Yes, that's precisely why his statement was fraud. He said he had funding secured when he didn't. He did this to manipulate the market.

Outside of the Musk cult, these are the laws people in Musk's position need to follow. If anything evidences SEC corruption it's Musk getting that sweetheart settlement for behavior that would land us average Joes in jail.


Your claim that the purpose was to manipulate the market has no evidence to support it.

If you want to talk about cults at least support your argument with evidence.


> The settlement with SEC clearly stated that no fault was found and no guilt admitted.

Who says that no fault was found? Surely not Musk. He didn’t admit or deny the allegations of the complaint. And:

Defendant understands and agrees to comply with the terms of 17 C.F.R. § 202.5(e), which provides in part that it is the Commission’s policy “not to permit a defendant or respondent to consent to a judgment or order that imposes a sanction while denying the allegations in the complaint or order for proceedings,” and “a refusal to admit the allegations is equivalent to a denial, unless the defendant or respondent states that he neither admits nor denies the allegations.” As part of Defendant’s agreement to comply with the terms of Section 202.5(e), Defendant: (i) will not take any action or make or permit to be made any public statement denying, directly or indirectly, any allegation in the complaint or creating the impression that the complaint is without factual basis; (ii) will not make or permit to be made any public statement to the effect that Defendant does not admit the allegations of the complaint, or that this Consent contains no admission of the allegations, without also stating that Defendant does not deny the allegations; ...

https://www.heise.de/downloads/18/2/5/1/1/4/0/4/SEC_Vergleic...


Public traded companies work like this:

You must tell the truth about how much money you make and spend, and report it annually to everyone, so they can make informed decisions about whether to buy or sell it the same as anyone else.

As long as you do, then you are allowed to sell stock. If you don't then you are not allowed to sell stock. The reasoning is obvious. It's too easy to commit fraud if you don't follow these rules. Therefore, you must agree to the rules to trade publicly. The SEC's job is to protect the public from fraud.


> This seems like a pretty simple mistake to have made

Elon Musk is the head of a public corporation, not a random Twitter user.


Making him immune to mistakes?


So he should stop tweeting about company related matters unless someone has cleared him to do so.

Seriously why? Do you go around teeeting about potentially sensitive company info? Employees don’t do it, why is Elon doing it?


Meaning his mistakes move markets. Nobody has to be on Twitter. If you are and you're on the c-suite of a publicly traded company, you need communication discipline


There’s a reason lawyers vet public statements by corporate officers.


Making him responsible for mistakes.


He's a human being who also happens to be the head of a public corporation. We can't expect every single action he takes at every point to be filtered into legalese.

IMO, if he had said this in an earnings call, or presented it in a way that made it seem "official", then I could get the problem, but it's twitter.


Tesla registered his Twitter account as an official channel for such information. That brings with it expectations and obligations, since investors etc now have to read it to be fully informed, and has similar relevance to e.g. official Tesla press releases.

He specifically agreed to have Tesla legal review all such tweets to make sure he doesn't tweet bad information again, and promptly went and ignored that.


I don’t think the ballpark estimate 0-500k could possibly be interpreted as accurate/reliable (and by extension, bad) information.

Except by some particularly whiny people looking for an excuse.


He said "around 500k", not "0-500k". And the SEC isn't filing this because he tweeted "bad" information, but because he violated the settlement where he agreed to have Tesla legal review all such tweets, which he didn't do. That he had to correct the numbers just made it obvious that he might have failed to do so.


> IMO, if he had said this in an earnings call, or presented it in a way that made it seem "official", then I could get the problem, but it's twitter.

TSLA stated five years ago that Musk's twitter is an official source of information regarding the company.


IMO, if he had said this in an earnings call, or presented it in a way that made it seem "official", then I could get the problem, but it's twitter.

As pointed out many times on this thread, Elon had Tesla designate his personal twitter account as an official source of material company information. Ergo, anything he posts to twitter is potentially subject to SEC reporting requirements.

If he didn't want that responsibility tied to his private account, he should have had Tesla create him a Tesla_CEO twitter handle that he could post from instead.


I actually agree with you somewhat; I'm a bit dismayed that any information at all on Twitter is being taken as worth a damn to any significant degree. It just means the day when I need a Twitter account to get anything done, creeps ever closer. But I feel like nobody else is concerned about that.


According to the company his twitter feed is an official source of information about the company.


So if he created two twitter accounts, ElonMuskCorp and ElonMuskPersonal, would he be in the clear on the 'Personal account?


Only if he does not reveal any insider info on the personal account. Still needs his corp account tweets pre-vetted coz of previous violation.



In one of their SEC filings. You need to search EDGAR.



We don't even hold our president liable for what he says on twitter.


That's because our constitution has no non-political mechanism for holding the president to the law. Unfortunately for Musk, the SEC has no such limitation.


Whataboutism.


username checks out


Trump's twitter statements have actually been used in court to strike down several of his executive actions...


Only in rulings that were later overturned, AFAIK.


The rulings I am referring to still stand...

Several of the courts hearing DACA cases upheld the law, in at least one instance solely because of Trump's tweets established a racial motivation rather than a policy motivation for terminating the program.

The Muslim ban was heavily modified after courts repeatedly struck it down based on Trump's anti-Muslim tweets. The final version was designed to address the issues raised in the original rulings. It is limited to countries like Iran and Syria which are openly hostile to the US, and countries like Yemen and Somalia which have contributed a large portion of the membership of terrorist groups like Al Queada and ISIS. Two of the countries were added to that list Venezuela and North Korea) solely because they aren't Muslim. Persons on this list are feasibly national security concerns, which is just enough of a justification to uphold the travel ban on legal grounds.


Yeah, it’s a bit of a disgrace really. Influencing global politics and destroying the US’s reputation in the world is apparently less relevant than someone potentially influencing some stocks.

I dunno, looking on from overseas it’s a bit surreal. Trumps tweets have normalized too, so it’s no news anymore when he tweets something outrageous.


Trump didn't commit securities fraud on Twitter. Yes, his Tweets are outrageous and absurd, but very few if any break the law. Him blocking people on Twitter was found to be unlawful and reversed by a court--for the same reason as Musk's activities, because he has repeatedly used his "personal" account for his job.


It's not about malice. It's well known that public statements by corporate officers and other key people can move the market so their statements tend to be scrutinized by all sides, including regulators. Another problem is it's often difficult to prove/disprove if a statement is an honest mistake or a misrepresentation (or even outright lie.) That's why it's so rare for company officials to go 'off script' when making public statements... pretty much everything they say is vetted by legal, PR and pretty much any impacted group in the company to ensure they don't step in it. Walking back / clarifying statements in his role can be much more costly than just keeping silent until you have the facts right.


It's a 'simple mistake' in his long line of ignoring well established SEC rules.


>was it that bad

>claimed 500k, but actually 400k

That's a 25% increase! Yeah that's bad! He was already warned for using twitter to spread misleading info about the value of his company. He should know better.


As others have pointed out, the issue is the SEC settlement that Musk agreed to. But to your question, yes, I think what he tweeted was bad, for a CEO and an engineer. The number he stated is literally off by 20%. How can you say what he did was an “honest mistake”, as if an engineer can’t be expected to know basic arithmetic? Or a CEO not to know that the peak rate of production per week is not the same as annual rate? Musk has all the info needed to make an accurate and still impressive claim — he chose to exaggerate. And he chose to do it after knowing the terms of the SEC settlement.


This, if anything, is a good lesson on why politicians and PR firms tend to speak the way they do.

Unfortunately, the baseline for your understanding requires a reasonable amount of intelligence, a reasonable amount of empathy, and a reasonable amount of ability to frame situations in context.

The reality is that, surprisingly enough to people like yourself, the majority of the population does not actually have all three of those abilities. It was something that was unbelievable to me until I was close to something that dealt with public opinion.

You are absolutely correct on your take of the situation. The reality, unfortunately, is that the majority of the population is not capable (not their fault) of understanding the situation at that level.

This is why messaging out of corporations and politicians tends to be so odd. The majority of people are simply not capable of understanding things at your level.

Edit: I would strongly encourage people here to look up the median reading level in the United States. Then find an example text above that reading level(it's around 9th grade) and realize that half of the United States is below that level


It's not about the 100K mistake; it's the fact that he signed an agreement with the government that all material information on his Twitter feed should be reviewed by Tesla's general counsel before being posted. This obviously was not, and it is obviously material even if he is reiterating guidance. Elon needs to live by the agreement he signed or face consequences.



The last two pages (pp. 11 and 12) are a great example of why you shouldn't be an arrogant dumbass towards the government. The SEC quotes his 60 minutes interview with Leslie Stahl where he says he doesn't respect the SEC. While I think the SEC has a legitimate grievance here, I'm also guessing this is partly vindictive. Play stupid games...

And I say all that as a big supporter of Elon generally.


It goes to intent.

Typically the law tries to at least somewhat take into account intent, like if someone omits something from a filing by accident or in a deliberate attempt to conceal, for example.

Pointing out his statements demonstrates that he's aware of the rules and is choosing not to respect them. That's usually a sign that someone should be on the higher end of the typical punishment range for a given act.


Especially in the case of contempt of court. The whole reason why you'd hold someone in contempt is if they are willfully not doing what the court says. The SEC is telling the court "Look, he's literally here talking about how he doesn't respect us. He's willingly doing this."


[flagged]


No, the intent is that he doesn't take the secs censure seriously. It helps to address the question of if this was an honest mistake or not, and the judgement will likely take that into account.


The SEC are arguing that civil contempt doesn't require intent.

But they also point out that yeah, maybe he's doing it on purpose.


The video of the bolded part is even more unbelievable: https://www.youtube.com/watch?v=cRNypdYQoWk&t=69


Government being vindictive would count as evidence against the government, not for it.


Why do people love to link to this awful PDF-rendering web page instead of the PDFs themselves?

https://assets.documentcloud.org/documents/5750664/Show-Caus...


Seems to me he was indeed repeating information that was already public.


He repeated it incorrectly(thus the follow up tweet). And it wouldn't matter anyway because he was required to get pre-approval again, even if repeating something verbatim, if more than two days had passed. From page 12:

> According to Tesla’s Policy, any edits to a pre-approved Written Communication or even releasing a verbatim pre-approved Written Communication more than two days after it has been pre-approved requires that the pre-approval be reconfirmed. Even if the exact substance of the 7:15 tweet had been pre-approved 20 days before, Musk cannot credibly claim that he thought he was not required to obtain pre-approval again under the plain terms of the Policy. In fact, the written communication in the 7:15 tweet was not pre-approved 20 days earlier or at any time. Musk’s claim that he thought he was simply restating information from the January 30 communications is not credible.


No. The range originally mentioned by Tesla in the earnings call was production of 350k-500k cars. He then tweeted about making 500k cars a year -- guiding the world to the extreme top range of the estimate.

This is material information, and he misled investors. It's clear cut.


To further highlight this point, which of these three statements would make you the most likely to invest in Tesla:

1) 350k-500k cars a year

2) around 400k cars a year

3) around 500k cars a year

The three statements communicate different information and (3) is the best, since unlike (1) and (2) it implies there's a chance that the production numbers can exceed 500k and would certainly be close to 500k in any case. Whereas, with (1) and (2) it probably won't be.

Furthermore, quoting a specific number, even if you have the word "around" before it, implies new information was obtained narrowing down the range given in the earnings call. Giving investors more clarity on how they should invest in Tesla. This makes it material.

If we can accept the information is material, then it's pointless to argue whether it's misleading or false, since that's not what the SEC is arguing about. Musk has to pre-approve material statements (due to his settlement with the SEC) and, according to internal Tesla policy, get that approval at most 2 days before posting them. The earnings call was on January 30, so even if pre-approval was given then (it wasn't) then it would have expired on February 19 when the tweets were made.

The fact that he misled investors (proven by the fact that he issued a correction 4 hours later), just adds extra ammunition to the SECs argument that Musk should have pre-approved his tweet as pre-approval would have caught the factual errors.

Seriously though, read through the court document, except for the bit at the end of page 9 (where they quote a bunch of cases) it's very simple to read and understand: https://www.documentcloud.org/documents/5750664-Show-Cause.h...


And even reiterating guidance is a material event. Since the original conference call, Model 3 sales in the United States have fallen off a cliff. If after that event if Elon still believes that they are on track for 500K cars, that is material to their business, and exactly the type of tweet that he signed an agreement for his general counsel to review before hitting send.


To me, the real shame is that he wasn’t able to actually take Tesla private last year. He loves being the public mouth of his companies and clearly can’t restrain himself from tweeting material information. Would be fine if Tesla weren’t public :/


Yep. A deal with the devil they had to make to let Tesla be where it is today.

Musk should just talk about the tech instead of the numbers though. The SEC are under pressure to bite Tesla for anything it does out of line.



Was that particular tweet the offender, or the two subsequent tweets?

> "Tesla made 0 cars in 2011, but will make around 500k in 2019"

> "Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k."

The article seems to suggest it was tweets about projected numbers.

Edit:

From the filing:

> "On February 19, 2019, Musk tweeted, “Tesla made 0 cars in 2011, but will make around 500k in 2019.” Musk did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people. Musk has thus violated the Court’s Final Judgment by engaging in the very conduct that the pre-approval provision of the Final Judgment was designed to prevent. "


According to the filing posted by another user, the first one.


That's incorrect if you read the SEC filling the problem was that he was projecting 2019 production publicly


> the problem was that he was projecting 2019 production publicly

That is also incorrect.

The settlement only mandated that Musk get company approval for Tesla-related tweets. It would have been as simple as him sending an email with the proposed tweet to get signoff before blasting it out there. This is actually extremely common and partially for these sorts of reasons.

The SEC asked Tesla if Musk followed the agreement by getting approval for the tweet. He didn't, thus this filing.


The settlement required approval for statement containing information material to shareholders, not any tweet about Tesla. That's why the 2019 projection was mention as the problematic tweet in the SEC filing


> The SEC asked Tesla if Musk followed the agreement by getting approval for the tweet. He didn't, thus this filing.

This is the unbelievable part.

"We agree to NOT do X, under penalty of law."

[Does X]

"Did you do X?"

"yeah lol"


It's not unbelievable at all (the admittance, not the act, to clarify). In fact I'd say it's rather refreshing.

Firstly, these people work for Tesla. They don't work for Elon Musk.

Hoping it's not just me, but there is no way I'm lying to the cops (corporate cops, criminal cops, federal cops, whatever) to protect my CEO. Especially if I'm directly asked "Did you* do X" (* where "you" means "Tesla CEO"). Double-especially in this case where the "X" is "not Y" and the person doing "Y" actively avoided you making sure they did "not Y".

If it's my job to make sure my Boss doesn't do something illegal, and he actively circumvents my ability to do my job, damn straight I'm rolling over to the Feds.


Elon is the guy who fucked up, not Telsa. Whoever the FEC asked that question to at Tesla was probably not Elon himself, and the person on the receiving end of that question probably didn't want to lie to a fed.


Yeah, I guess I understand why they confirmed it, it's just wild that this is happening right now.


I'm just a random nobody and I have to get way more approval posting anything work-related than Elon Musk, apparently.


Right, he was projecting 2019 production publicly, and the SEC cites the first tweet as the projection that violated the original agreement.


Except that was already public information.


Correct. It was in the outlook of the last quarterly:

http://ir.tesla.com/static-files/0b913415-467d-4c0d-be4c-922...


That says 500k annualized, not 500k for the year


And 500k annualized is what he claims the meaning of the tweet to be.

Unless Tesla updates their projections soon, that's probably not a lie.


Nobody's claiming the annualized number is a lie. The claim is the original post is wrongly saying 500k total for the year and wasn't run past someone else like Musk promised he would for all Tesla related statements.


> Nobody's claiming the annualized number is a lie.

I was talking about whether "Musk meant the annualized number." is true or a lie.

> The claim is the original post is wrongly saying 500k total for the year and wasn't run past someone else like Musk promised he would for all Tesla related statements.

The agreement was that he would get approval for posts with material information.

If he's citing a number everyone already knows from the public report, then it's not material information. (except in some kind of unreasonably-broad sense that would make "Tesla makes cars." an offending tweet)

So if he says 500k, and he's talking about the annualized number in the previous public report, then there is a strong argument that he doesn't need approval.

If he says 500k and it's not annualized, then it's a new number, and he does need approval.


It doesn't matter what he meant, it matters what the statement would be reasonably expected to mean. Saying we'll produce 500k can't reasonably be read as we'll have an annualized rate of 500k, which is why he needed to issue a correction.


> It doesn't matter what he meant, it matters what the statement would be reasonably expected to mean.

That depends on whether you consider a misphrasing to be "information".


Did investors know it was a 'misphrasing' before he issued a correction hours later?


Does that change whether it counts as "information"?

Harm to investors isn't the criteria for whether this breached the agreement. (And is probably low to zero for a couple tweets outside trading hours.)


Claims about production numbers are 'information'.


Not if they are already known.


Original statement from the annual report was "Barring unexpected challenges with Gigafactory Shanghai, we are targeting annualized Model 3 output in excess of 500,000 units sometime between Q4 of 2019 and Q2 of 2020."

So saying "we'll produce 500k cars in 2019" is a lot of new information:

- it's now definitely 2019, not Q2 2020

- it's 500k total, not just "annualized output"

- risk of "unexpected challeges" in Shanghai disappeared.


And do you think that's because he got such significant new information in the two weeks since the report, or because he summarized badly?

By itself it looks like new information. But once you consider it's a typical post on twitter, it's quite plausible that it's a botched quotation.

The agreement pertains to posts that "contain, or reasonably could contain, material information". Sounds like it needs [a likelihood of] actual material information to count.

(This is all assuming that "material information" is info that's not already widely publicly distributed. In other words I am assuming that a tweet of "Tesla makes cars." would not violate the agreement.)

(Also, none of this precludes him getting in trouble for a misleading tweet, entirely separately from whether he violated this agreement.)


It wasn't "already known" because it wasn't true. Otherwise a correction wouldn't have been given hours later.


> If he's citing a number everyone already knows from the public report, then it's not material information.

The production and sales figures of a car maker are always material information, IMO. Under the facts you posit, they would not be non-public or novel information, but they would still be material information.

Even with that, he was not re-communicating previously issued guidance unchanged. Even with that and even if he were, he still needed to get approval prior to doing it.


> they would not be non-public or novel information, but they would still be material information.

Well I attempted to address that. Do you think a tweet of "Tesla makes cars." would violate the agreement?

I'm not joking or being rhetorical when I ask that. The answer could be "yes", but in that case I feel like the agreement was written to be intentionally misleading because it should just say "any mention of Tesla".


> Do you think a tweet of "Tesla makes cars." would violate the agreement? I'm not joking or being rhetorical when I ask that.

I would agree that particular statement is so utterly obvious and completely devoid of news content as to not violate the agreement. However a statement that "Tesla is going to begin shipping a new model of car" or "Tesla is going to begin shipping the Tesla truck" or "Tesla is going into the solar business by bailing out my other company" or other statements would be material (and therefore subject to pre-approval).

Note that "Tesla makes cars" is itself materially different from "Tesla expects to ship around 500K cars in 2019" (even before considering that the former is true and the latter is false).


> However a statement that "Tesla is going to begin shipping a new model of car" or "Tesla is going to begin shipping the Tesla truck" or "Tesla is going into the solar business by bailing out my other company" or other statements would be material (and therefore subject to pre-approval).

If those are all things that were in a recent public report, I don't see a difference. They're all public information about the company, and they all matter. Anything in the quarterly report should count as fully obvious in a "reasonable investor" context.

> Note that "Tesla makes cars" is itself materially different from "Tesla expects to ship around 500K cars in 2019" (even before considering that the former is true and the latter is false).

How so? If anything, "Tesla makes cars" is vastly more important than their production expectation. Is the different that it's in future tense? That again would only make his tweet less material.


That they were in a recent (but not within 2 days) public report is not in compliance with the prior consent decree entered into with the SEC from his prior misleading tweets in the late summer of 2018 which required the company to institute and executives to follow a policy designed to prevent such misleading tweets in the future. The company elected to enact a policy that clearly requires any edits to previously released/approved material to be re-approved and any disclosures more than 2 days after the approval to be re-approved. It is obvious that Musk violated that policy.

The filing is a very quick and clear read (probably less than 5 minutes to understand the essence of their straightforward case): https://www.documentcloud.org/documents/5750664-Show-Cause.h...


If it was material information, he very clearly violated the policy.

The rules about editing don't matter, because this post wasn't an edit.

But what does "information material to Tesla or its stockholders" actually mean?

If we take it completely literally, then almost any tweet that mentions Tesla would be in violation.

Maybe that's the actual intent. But it doesn't much sense. Why wouldn't the agreement just say that? And he's posted tons of tweets about Tesla, largely referencing news articles, and the SEC didn't say a word about any of them. Did he get approval for every single one of them? I think it's meaningful that the only tweet the SEC complained about was the one that appeared to have new information.

It seems like there's an implication that to be "material" the information has to actually matter to the people that get it. If he cites something that was in a news article, such as the 500k number, then it wouldn't be a problem, because everyone already has it.

And again, it's not an edit, so he can't be breaching the rules about edits. It's either a straightforward release of material information and he's in violation, or it doesn't count as material information and he's off the hook.


Is there any possibility in your mind that releasing a projected number of sales that is on the high end of a range previously given (which would be an edit of sorts) and was false/misleading was not material information to investors or prospective investors?

I have zero doubt it’s both material and misleading, even though material would have been enough to breach the prior agreement, but the combination of both is unlikely to escape the SEC attention.

I also don’t think this is anywhere near as bad as the summer “Funding Secured” outright fraud. If he’d done them in the opposite order in time, we might not ever be talking about this one and almost surely wouldn’t be getting SEC ire over this one (and obviously couldn’t get a contempt of court charge). With the pattern of facts as alleged, I think he’s well earned a contempt of court charge, and is likely both legally and literally true that he has contempt for the court.


Let me put it this way. If he goes on twitter and lies, then he can get in massive trouble but I don't think this agreement applies. This specific agreement is about him releasing actual information.

I don't consider lies to be "material information".

So in this case he was quoting public info, and he was misleading.

The agreement only cares about the first half of that sentence, and there are reasonable arguments in either direction about whether a quote of public info violates the agreement.

Then we come to the "misleading" part. Maybe he gets in trouble but I think using the agreement for that is barking up the wrong tree. Also people should expect tweets to have sloppy phrasing.


Excerpts rom the SEC court filing: The SEC required this provision as a term of its settlement with Musk in order to prevent Musk from recklessly disseminating false or inaccurate information about Tesla in the future. On February 19, 2019, Musk tweeted, “Tesla made 0 cars in 2011, but will make around 500k in 2019.” Musk did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people. Musk has thus violated the Court’s Final Judgment by engaging in the very conduct that the preapproval provision of the Final Judgment was designed to prevent.

As one of the terms of his settlement, Musk agreed to comply with procedures implemented by Tesla that would require him to seek pre-approval of any written communications, including social media posts, that contained or reasonably could contain information material to Tesla or its shareholders.

Consistent with the Court’s Tesla Judgment, on December 11, 2018, Tesla adopted a “Senior Executives Communications Policy” (the “Policy”). Written Communications that contain, or reasonably could contain, information material to Tesla or its stockholders must, prior to posting or other publication, be submitted to Tesla’s General Counsel and Disclosure Counsel (or in the event of the General Counsel’s unavailability, Tesla’s Chief Financial Officer and Disclosure Counsel) for pre‐approval. Authorized Executives are not authorized to post or publish Written Communications that contain, or reasonably could contain, information material to Tesla or its stockholders without obtaining pre‐approval. The Policy provides a non-exclusive list of examples of information that may be “material to Tesla or its stockholders,” which includes “projections, forecasts, or estimates regarding Tesla’s business.” Id. at 1-2. Finally, Tesla’s Policy requires that [i]f an Authorized Executive (i) further edits a pre‐approved Written Communication, or (ii) desires to release a Written Communication more than two (2) days, after receipt of written pre‐approval, such Authorized Executive will re‐confirm the pre‐approval in writing in accordance with this Policy prior to release.

Could you make an attempt at arguing the reasonable argument in the other direction?


The argument is that "information material to Tesla or its stockholders" only applies to information that wasn't already public.

The tweet may have appeared to have nonpublic information, but it didn't actually have any.

Therefore the tweet didn't need approval.

That's the core of the argument. Is that clear enough? I already tried to explain why I think it's reasonable in previous posts, but I can do it again if you want me to.


It is clear enough now; I missed that before.

I missed that as the thrust of your argument, because even if the information in that tweet was "material but not non-public due to previously approved disclosure", it would fall afoul of the "more than 2-days since approved" and "approved previously but now has edits" restrictions, which still leaves Musk in violation of the policy and therefore the court agreement.

(I also believe that the update of the range from "350k-500k" [previously public] to "around 500k" [in the tweet] to be a material update when given by the CEO of a company and that the SEC will argue that is also the case, but I agree/admit that there's some room for argument on that point.)

Thank you for the topic-centered discussion and I hope you experienced (as I did) this exchange as "disagreeing without being disagreeable".


So all he has to do is find a fall guy to say he approved it, and it will be thrown out?


Tesla's legal already said they didn't approve the first tweet, but they worked with him on the correction that was posted 4 hours later. Wonder if that's why their general counsel quit again...


Yes. Getting out of contempt of court is so easy! Just add a little perjury on top. Who's keeping track anyway?


This is where a software solution might actually help. As an example, I've added some keywords to a script in my IRC client that if they exist the message is stopped by my client.

In Elon Musks' case this should be Tesla (and probably some other court mandated muzzles) and should be on their Twitter clients, and other "designated publication channels" that the ruling covers.

Why? Because remembering to not do things is a restraint that is extremely mentally burdensome and thus difficult to get correct 100% of the time.

Also, this should probably apply to CEOs and other "public figures" as a general practice they work with through their PR and marketing firms.

The fact that twitter and other platforms are closed only makes this innovation more difficult to add to end user clients.


Why? Because remembering to not do things is a restraint that is extremely mentally burdensome and thus difficult to get correct 100% of the time.

When you're the CEO of a publicly traded company, getting paid millions in stock comp to run that company, you don't get to use the excuse "it's mentally burdensome". The whole reason they're in that position, getting paid those obscene amounts, is that they're supposed to be able to handle the burden. If they're not able to handle it, they should step aside for someone who can.


It has been demonstrated countless times that "just don't make mistakes" does not work, has never worked, and will never work. The whole reason bureaucracy exists is because people can't even be expected to consistently follow their own rules, let alone rules that are imposed on them. Every publicly-traded company has a process for shareholder communication but Elon Musk is just out there tweeting whatever comes to his mind.


This isn't a mistake. Musk is on record saying he doesn't respect the SEC, suggesting he doesn't feel bound by his legal agreement with them. He does this on purpose.


Why are you bawking at OP's software solution, in favor of a much more complicated software solution?


The solution I favor is the one that Musk agreed to in his legal settlement with the SEC: have a human review his tweets before he hits the post button. No additional software required. If Tesla wants, they can overengineer a solution like they did with the Alien Dreadnought, but there's a zero-cost solution already available to them.


My point is only a robot could adjust their behavior that fast to 100% comply with the SEC agreement.


Are you serious? Literally no other major CEO has ever needed something like this because they can exercise the barest minimum of self-discipline. Most actually have a built in "STFU button" when it comes to making financial projections on Twitter.

I thought Musk spent 120 hrs/wk working and sleeping in the factory, why would he need to be tweeting about production numbers that have yet to be hit?


Excitement?


Drug abuse.


> Because remembering to not do things is a restraint that is extremely mentally burdensome and thus difficult to get correct 100% of the time.

I have ADHD. I legitimately struggle with impulses.

Here's why I am not on Twitter: I have ADHD. I legitimately struggle with impulses.


you mean like the dozens of tools out there used by corporation's to approve and manage tweets that their social media teams send out.


Like Gmail's "undo send" feature? All it does is wait tens seconds to send your message but many people find this to be just enough to back out of dumb statements from time to time.


I'm wondering if an AI could be trained to recognize the good/mhea/bad tweets from Elon Musk (by looking at the time of tweets, reactions in the press, and Tesla stock price). A "Should Musk have tweeted that" app or something like that, giving a score for his latest tweet.


Musk would start getting creative with a thesaurus.


1. Judges at this level are pretty smart.

2. They tend to take contempt seriously.

3. Especially if you double down on it.


He should really have a public relations spokesman/spokeswoman for this type of messages... Especially since this same situation already happened.


Not sure why you're being downvoted. I totally agree, anyone with that much power and influence should want to make sure they are putting their best foot forward at all times.


At least we got him to host meme review [1] before he goes to jail

[1] https://www.youtube.com/watch?v=zpWYQ1YtgnI


He said the same thing in that podcast he did recently. The podcast he did with that company that says Tesla stock has multiple thousand upside.


So what's the potential punishment for this, assuming he's found in contempt?


A fine.


I am surprised by the number of people here as well as on Twitter confusing between "annualized" and "annual". If I make 1% trading a stock in one day then the annualized return is (1.01^365 - 1) * 100 = 3,678% but that's not the annual return!

In case of Tesla, I think the annualized target production of 500K cars was calculated over 3 quarters (please feel free to correct me).


Can someone post a non wsj link?



WSJ is usually first on anything negative regarding Tesla. Might have to wait a bit for others to pick the story up.


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