SEC Sends Subpoena To Tesla In Probe Over Musk's Take-Private Tweets (bloomberg.com)

The U.S. Securities and Exchange Commission sent Tesla a subpoena regarding Elon Musk's effort to take the company private, "indicating the regulatory scrutiny of his statements have reached a more serious stage," reports Bloomberg. Last week, Musk tweeted he was considering taking Tesla off the market and had "funding secured" for the deal. From the report: Musk exposed himself to legal risk by tweeting Aug. 7 that he had the funding for a buyout. Almost a week later, the chief executive officer said the basis for his statement was conversations with Saudi Arabia's Public Investment Fund, which first expressed interest in helping take the company private in early 2017. Tesla's board has since clarified that it hasn't received a formal proposal from Musk, who's also chairman, nor has it concluded whether going private would be advisable or feasible. Tesla may face potential regulatory challenges beyond the SEC investigation. The company probably will need approval of U.S. national security officials if Saudi Arabia finances the effort to take the company private, and President Donald Trump's administration has been stepping up scrutiny of foreign investment in American technology.

Comments

Didn't I tell you?

[PopeRatzo]

I'm not one to say, "I told you so", but if you look at the comments from when this story first came out, you will see I commented that his obvious attempt to manipulate stock price could get him in serious trouble with the SEC. A long thread of Musk fans and the Anonymous Coward telling me that was nonsense and nothing Musk did was improper followed. Matter of fact, the thread is still active with back-benchers arguing with me about how Musk doesn't need to do any of this because he's a billionaire and really doesn't care about the stock price of Tesla.

Well...

https://youtu.be/9AajslFuPro

Here is the thread. I told you so.

https://slashdot.org/comments....

Re:Didn't I tell you?

[Train0987]

Couple things:

The SEC has their own subpoena powers. No judge necessary. Companies agree to comply as part of the process of going public.

The SEC only has civil jurisdiction, not criminal. The only thing the SEC can do is levy fines and bar company officers from being officers. The DOJ (FBI) will have to get involved for indictments to happen.

Re:Didn't I tell you?

[gman003]

A subpoena is one step below a warrant, and one does not generally have to convince a judge of anything to obtain one. They are often issued by the clerk of the court, or even by the lawyers themselves. Or, as in this case, it was directly issued by a federal agency.

If one is served a subpoena that they believe is invalid, they must file a formal objection with the court. Simply ignoring a subpoena, even an improper one, is grounds for penalty.

A warrant, in contrast, is an authorization by a judge or other "competent official" for an officer to perform an act that would otherwise be illegal, most frequently to arrest someone or to perform a search, but is also used for executions and myriad other things.

Re:This is what happens when you enter the stock

[PopeRatzzo]

And this is laissez-faire capitalism at its finest. Only in America would you get a weird look for having government intervention at this stage.

Bloomberg called it

[mewsenews]

Bloomberg ran an article titled Elon Musk's Funding for Tesla Wasn't So Secure where they pointed out when Musk said "funding is secured" there was no actual agreement in place. His statement being factually untrue risked causing this SEC investigation.

Re:Bloomberg called it

[ISayWeOnlyToBePolite]

Bloomberg ran an article titled Elon Musk's Funding for Tesla Wasn't So Secure where they pointed out when Musk said "funding is secured" there was no actual agreement in place. His statement being factually untrue risked causing this SEC investigation.

Per recent discussion concerning fake news, I'd mention that the article linked is an opinion pice by Matt Levine as noted in the headline and it comes with a disclaimer at the end. Imho it's a worthwhile read.

Re:In the age of Trump Tweets. . .

[Train0987]

How the CEO of a publicly-traded company should act are not "theories". There are laws regulating it.

A CEO is breaking the law if he makes false statements to manipulate his stock price. A.K.A. "Funding secured" (to burn the shorts). CEO's are also not allowed to buy or sell their own stock while privy to non-public material information. A.K.A. a buyout at 40% above the current price with funding secured.

There are several other laws regulating behavior that officers of public companies must abide by but those two are pretty basic.

Musk explains at greater length in a blog post

[Michael Woodhams]

Here.

Key points:
* This had been discussed with the board before the announcement
* The board agreed that the next step was to discuss with large shareholders.
* It would be unfair for the big shareholders to know of this proposal but not the small shareholders, hence a public announcement. (It isn't clear to me whether the board specifically agreed to this announcement, or whether Musk felt it was a logical consequence of the previous point.)
* "Funding secured" means the Saudi Arabian sovereign wealth fund has been eager to do this for quite some time, although Musk would like there to be other investors too.

I feel somewhat but not completely reassured by this explanation.

Re:In the age of Trump Tweets. . .

[Idou]

You do realize that the entire basis for Wall Street (and capitalism) is that new, high growth wealth creation ideas initially require more funding than they can initially generate from their own operations, right? Ever heard the phrase, "it takes money to make money?" The vast majority of new forms of wealth creation require some form of initial "investment." Larger and longer periods of investment are correlated with higher expectations of growth and wealth creation.

But, specifically, which party is gaining wealth at the expense of which party in Tesla's case? Keep in mind, if Tesla goes private at $420 a share, everyone who has ever bought long and held to that point will realize a significant return. Where did that wealth come from? It was created turning boring, commodity materials into the best car I have ever owned.