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SEC Charges Elon Musk With Fraud Over His Statements To Take Tesla Private (bloomberg.com)
U.S. securities regulators have sued Elon Musk for allegedly making false statements related to his abandoned efforts to take Tesla Motors private. Bloomberg News broke the news Thursday, citing docket entry in Manhattan federal court. Last month, Musk had expressed his intentions to take Tesla private, and that he had secured the funding. Taking Tesla private, which would have helped the company avoid making short-term commitments and goals, would be the "best path forward," Musk had said at the time. Even as investors had shown agreement to Musk's move, a few days later, he announced that after further discussions, everyone believes that Tesla should remain public. Amid all of this, some argued that Musk made the "false" claim just to hurt short-sellers. From the lawsuit: This case involves a series of false and misleading statements made by Elon Musk, the Chief Executive Officer of Tesla, Inc. ("Tesla"), on August 7, 2018, regarding taking Tesla, a publicly traded company, private. Musk's statements, disseminated via Twitter, falsely indicated that, should he so choose, it was virtually certain that he could take Tesla private at a purchase price that reflected a substantial premium over Tesla stock's then-current share price, that funding for this multi-billion dollar transaction had been secured, and that the only contingency was a shareholder vote. In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source. During a press conference, Stephanie Avakian, co-director of the SEC's division of enforcement, said: A chairman and CEO of a public company has important responsibilities to shareholders. Those responsibilities include the need to be scrupulous and careful about the truth and accuracy of statements made to the investing public, whether those statements are made in traditional forms such as a press release or an earnings call or through less formal methods such as Twitter or other social media. Neither celebrity status nor reputation as a technological innovator provide an exemption from the federal securities laws. In a statement to CNBC, Musk said, "This unjustified action by the SEC leaves me deeply saddened and disappointed. I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way."
It was probably more an act of stupidity under influence than a premeditated attempt at a short squeeze, but if you're wearing the CEO hat, you have less leeway for stupidity.
So, fraud charges secured.
What about the longs who bought at 375, thinking it's a "dip"? It is 275 now, who knows what it will be tomorrow. Do they deserve protection from the fraudulent claims about "funding secured"?
Slashdot article is wrong. It's only against Musk, not Tesla
It appears to have since been edited to correct this error. When I first loaded this article, the HTML title element was
but its headline was (with my emphasis of those words that differed)
I reloaded again and the new title also appeared as the headline. This calls to mind both of Phil Karlton's two hard problems in computer science: cache invalidation and naming things.
Short sellers do provide a service by counter balancing the voice of shareholders who only have an incentive to see share prices increase.
The lawsuit, filed in federal court in New York, seeks to bar Mr. Musk from serving as an executive or director of publicly traded companies. Tesla, which Mr. Musk co-founded, is publicly traded.
One of our competitors trademarked the term "hypothesis". From now on, we will call them "boneheaded ideas".
This makes me wonder what would happen if there were no rules about fraudulent claims.
Wouldn't that result in basically all claims being thought of as fraudulent until they were proven otherwise? Companies with a track record of consistently telling the truth over the long haul might gain some credibility, but everyone else is the liar that they are now.
The idea that companies are honest now because they skate on the edges of the rules is laughable.
Just look what happened before we had these laws to see. Everyone made whatever claim they wanted, people frequently bought in on it, and they lost everything. Now at least a much smaller population is willing ot make false claims, and when they do we can punish them for it. The system isn't perfect, but its better than no system at all.
I still have more fans than freaks. WTF is wrong with you people?
the law says otherwise. your silly immature view of sort selling and lack of understand of markets is of no relevance. Musk broke the law.
were false claims made by company executives that caused that dip? no? then you have no point. Musk lied and manipulated market price, that's against the law.
what would happen if there were no rules about fraudulent claims
You can probably look at the stock market decades ago to get an idea. Reading stock market history from the perspective of the science of economics is fascinating.
The idea that companies are honest now because they skate on the edges of the rules is laughable.
You misunderstand the motivation for the rules. The general idea is that punishment reduces the incentives to be dishonest, not to eliminate dishonesty altogether. It is less than ideal, but it is better than nothing.
You can just look at Elon Musk's previous tweets and public communications to see that he tends to get excited about things and make promises or statements about them that are a bit optimistic.
I have no reason to believe what happened here was a snap decision on his part that going private would be a really good thing for Tesla in the long-haul. And when he got word that some of the folks in Saudi Arabia were about to dump serious money into investing in an EV, he made a bet they were referring to HIS company and made the statement he made.
Unfortunately, the Saudis sunk $1 billion of capital into "Lucid", a wanna-be Tesla competitor that doesn't even have a single finished product yet available to the public. It remains to be seen how that will turn out for everyone.
Wouldn't it be delicious if this derailed humanity's path to the stars long enough that we didn't make it as a species?
I honestly can't think of a worse group of folks than financial lawyers, or a better group of people than SpaceX.
A government is a body of people notably ungoverned - AC
...it seemed like a bait to try get Apple to buy him out. He's getting bogged down with Tesla and really wants to liquidate and concentrate on SpaceX. Sadly for everyone it didn't work.
Seriously. They bring *nothing* to the table, and they're incentivized to shit on Tesla at every opportunity to keep the stock price down. I wish Musk would have taken it private just to spite them.
Do you have ESP?
On the one side, we have someone who could be humanity's best hope for escaping extinction.
On the other side, we have a bunch of rich assholes trying gambling that he'll fail, and expecting to pull some money out of thin air if they're right.
Part of me wants Elon to fail. We don't really deserve to spread our seed throughout the galaxy.
A government is a body of people notably ungoverned - AC
Next up: Corey Booker, admitted groper! Why is he even allowed to sit in judgment of Kavanaugh in the first place? Maybe the Democrats believe it "takes one to know one"?
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Cool. Then impeach Kavanaugh. Judges can be impeached - why not go that route?
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Next up: Corey Booker, admitted groper! Why is he even allowed to sit in judgment of Kavanaugh in the first place? Maybe the Democrats believe it "takes one to know one"?
We know beyond the shadow of a doubt that Trump is a rapist. Granted, it wasn't considered rape to force sex on his wife in the state he was in at the time, but it would have been in any civilized place. Better not throw stones at Democrats, eh?
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
??? Has Melania charged him with that? Is the "victim" not aware of her status? In the meantime, we have Booker openly proclaiming he did what Kavanaugh is accused of doing - and no one cares. Start with the admitted 'rapist' first...
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
You still don't understand basic finance, and you still make multiple posts repeating bullshit multiple times in every single thread mentioning Musk, even if it's not remotely related to Tesla. You're obsessed with your own opinion of him. Are you sure you avoided cults? Because you sure act like you're in a Tesla-must-die one.
They do not lose $18,000 per car. As I've said many, many, many times before, with references, Capital expenditures are accounted for in cost of revenue. Which you still don't get, and makes you come up with bullshit numbers like this.
I may be in a cult, but it's an accounting-terms-have-definitions-math-matters-you-don't-get-to-make-it-up one.
Nah, actually, I'm sticking to balogney! Quick, sue me for fraud because you lost money on Peanut Butter futures because you're a fucking dimwit!
Maybe the SEC should sue itself too?
The SEC isn't some random "rich people". It's the organization charged by the people with enforcing laws which govern investment activities and corporate governance. This is a much bigger deal than a random lawsuit.
Lying would require that he knew, at the time that he said it, that the statement was untrue.
Never attribute to malice that which can adequately be explained by stupidity.
You may have grounds to say that he's incompetent, but there is no reason to think that his claims were anything but something said in haste that was not given appropriate consideration before saying aloud.
Legally speaking, it is literally impossible to commit fraud unintentionally.
File under 'M' for 'Manic ranting'
??? Has Melania charged him with that?
It wasn't Melania. You do know he's been married repeatedly, right?
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
This makes me wonder what would happen if there were no rules about fraudulent claims.
How would that work out? Would it be okay for a company to outright lie about, say, their profits?
If I lie on a loan application about my income, I could conceivably be criminally and/or civilly liable. If Iie about certain facts about a car I am trying to sell you (e.g. I claim just had the brakes fixed, when my mechanic just confirmed my suspicion that the brakes were failing and I did not bother to have them fixed), I could conceivably be criminally and/or civilly liable.
What is so different about a CEO of a company who is offering one millionth ownership of a company on the public market if the CEO lies about everything? What can't that be criminally and/or civilly actionable? What is gained by allowing unlimited leeway for what is fundamentally no different from any other kind of fraud?
The idea that companies are honest now because they skate on the edges of the rules is laughable.
The rules are not expected to achieve some generic state of consistent trustworthiness. They are to prevent outright lying about certain things, so that the marketplace is honest enough to consistently attract divers investors. In the long run, that can be a win-win. More access to capital for businesses. More access to different kinds of investments to the general public.
"Those Wall Street people are working for us in the end.
Do you understand?"
It seems to me that you have no fucking clue what Wall Street does.
Investments in property, plant and equipment (capital investments) are amortized over their useful life (25-50 for buildings, 15 for robotics, 3 for computers, etc...)
You are attempting to amortize all of the capital investments immediately, which is the only way that you can come up with numbers that show a loss on every vehicle.
you are only demonstrating your complete lack of knowledge and not really being convincing beyond that
So Marla? Ivana? Which one charged him with rape? Citation needed... Or is this another way of you distracting from your false claim of Tesla making money on each Model 3 they sell?
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Seems to me the math is on point. You, for some reason, want to ignore the losses as "capital investment" despite the fact that the investment is nearly entirely to build more of the cars they are selling at a huge fucking loss.
They'll make it up in volume.
And on this day, the TSLA shorts masturbated furiously.
Astrology fails: You didn't work "trine" in there somehow. You didn't mention GMOs, either.
As described, the book was appended with a statement from Ivana Trump disavowing that she intended to use the word “rape” in its commonly understood manner (i.e., forcible sex without consent):
During a deposition given by me in connection with my matrimonial case, I stated that my husband had raped me.
I wish to say that on one occasion during 1989, Mr Trump and I had marital relations in which he behaved very differently toward me than he had during our marriage.
As a woman, I felt violated, as the love and tenderness which he normally exhibited toward me, was absent. I referred to this as a ‘rape,’ but I do not want my words to be interpreted in a literal or criminal sense.
Oh, you mean that rape that wasn't rape per the person who supposedly made the charge, and which even Snopes says wasn't rape? That rape?
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
It's dem Big Oil barons.
My grampa told me he read in a 1971 issue of Popular Mechanics that ther wez a pill you cud put in water to turnit into 120 octane gas. But teh Big Oil barons bought the patent and shudder down!
What won't dem bastard Big Oil barons do?!?! Sheesh!
It was the 'funding secured' lie that has Elon Musk (sounds like a Revlon perfume, doesn't it?) in trouble.
She changed her story later, probably in response to threats from Trump. And maybe she'll reveal why at some point in the future. But he clearly raped her, and you're clearly trying to make excuses for rape. That makes you rapey AF.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
So Ivana recanted, no charges were pressed, and no physical evidence. Of course you believe it was rape! Just like you believe Tesla makes a profit on each car they sell! You'll believe anything as long as it validates your world-view, facts be damned! Where are the numbers that say Tesla makes a profit?
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
"The whole SEC seems to be chuck full of damned PEDOs."
And in cases where they were accused of lying and found to have done it, were they usually banned for life from working in the same field? In that normally how the SEC handles executives?
Given that they're asking the equivalent of the death penalty (it is the worst penalty they can ask for and ends the person's career) it would look pretty bad if other executives have been found to do much much worse, and weren't banned.
I didn't say it was personal - it's just business. I don't think Soros really wanted to destroy a lot of people's retirement back in the 90s, but that was the result of his actions. Yeah, not personal, but that doesn't really mean much.
Do you have ESP?
Score: 0, Troll
It's just like real life - the short sellers get all the mod points and exercise them to legislate against people who complain about them destroying things.
A colony on mars would Ensure this, Lets help with this endeavor. :)
[($)]
The whole reason short sellers are shits is that their mere presence devalues the stock, hurting actual investors. They sell things they don't have (from the accounts of the investors) which drives down the stock, in the hope that it will go down even further. In turn they have a motivation to push propaganda suggesting the stock will fall even further or otherwise disrupt the company at the industrial and regulatory scale (something which happens all the fucking time for large scale hedge funds who want to be more proactive about their short positions - which due to the social networks involved is almost impossible to track down and stop in spite of being highly illegal - this is basically what made Soros all his money "hedging" against political unrest around the world and then starting actual riots where people died for it to happen.) It's even happening right now - all the longs took the tact of reality (as proven by this article) by saying the SEC would sue Musk - all the shorts have been advertising and screeching about how they would sue Tesla directly (in another attempt to drive down the value of Tesla.) Don't get me wrong, Tesla is overhyped as fuck, but most of the value losses (and in turn their real-world ability to produce things based on that value/liquidity getting fucked sideways) is due to short sellers - if not for the shorts they would legitimately be likely to be profitable by now.
You do understand they don't need to buy a robot for every car they make, right? They don't wear out after each car passes by.
Revenue rises at a steeper slope than operational costs, and at some point they cross over - that would be what is referred to as "cash-flow positive". The question is when that crossover happens.
This has been pointed out to you many times, but you don't ever listen. Either you're just spreading FUD because reasons, or you're completely daft and refuse to learn anything.
Slashdot still doesnâ(TM)t support Unicode after it was added to the HTML standard in 1997.
Musk really needs to get a president into Tesla to handle day-2-day stuff.
I prefer the "u" in honour as it seems to be missing these days.
So what financial report shows them making money?
That report shows a gross profit of $2.2B, so the cost to make whatever it is that they're selling is giving them a gross profit margin around 18%. Not bad.
Per last quarter's reporting Tesla lost $17,600 per car they made (loss divided by the number of cars delivered). What do you have that says otherwise? Real, hard numbers. Put them up, link them, define them. Because the Tesla filings say you are wrong.
When you add in all the other things going on, there's no way Tesla will show a profit on paper until they make enough cars to spread out the CAPEX + depreciation and amortisation + SG&A + interest, where the profit margin per car x the number of cars sold exceeds all those costs. Right now it looks like there's an excess of CAPEX scaling up their manufactories to meet demand, so until that tapers off and they take advantage of the extra capability I'd expect them to stay in the red. I don't see any break-up of their SG&A expenditure and I CBF looking (I have no interest either way), so that's about all I can figure out.
Really - it's getting to the point that you can't even commit securities fraud anymore without someone getting their nose out of joint. Life is so unfair!
This morning I googled this again to see if articles had any other comments. One of the top ones that showed up on my work PC was (I forget where from) simply titled: "SEC says 420 was a pot reference." Ummm....... ok? I think most everyone already thought/assumed/knew that. Not quite sure why it was the entire subject of an article.
Don't tweet. There. That's it. Put down your phone, get some sleep, and don't tweet.
Make love, not reality television.
This whole Shorts vs. the Longs is a delusional fantasy Musk cooked up to rally the fans and make him seem like an underdog
As far as Tesla goes, I've always found it funny to see the relations of those for or against the company. The pro-Tesla people are treated as fanatical maniacs who love and worship Musk, and have formed a crazed cult of insanity. Anyone not pro-Tesla is an evil short, wanting the company to die and people to lose their jobs so they can twirl their mustaches as they make money off of Tesla's failure.
How about all the people the bought the stock on the promise of a buyout at a significant premium?
Revenue rises at a steeper slope than operational costs, and at some point they cross over - that would be what is referred to as "cash-flow positive". The question is when that crossover happens.
Ideally, yes. The problem is that non-capex operational costs (SG&A) have maintained a pretty consistent 20% of revenue for the last 5 years - including last quarter. So that crossover really never comes about - operational costs are scaling right along with revenue. That's what so many continue to ignore. Right now, the growth curve of revenue and SG&A show the crossover will never happen - and that's not including capex, R&D, or even interest on debt.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
And that report shows an SG&A of $2.5 billion. So revenue minus COGM gives a profit; but add in the costs to actually get that revenue (sales, general and administration) and you're at a loss. That's like claiming you own a restaurant and because you sold $500 worth of ingredients for $800, you made a profit - never mind that staff alone cost you another $500...
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
The shorts did nothing; Musk did everything. Thus the charges, and thus the ~12% drop (as of right now) in stock price, from yesterday. There is exactly one guilty party here, and his name starts with Elon and ends with Musk.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Nelson laugh
An enigma, wrapped in a riddle, shrouded in bacon and cheese
"straight ticket Democrat voter"
Every vehicle is doom to fail if the driver is competent enough to make only left turns.
Off topic this is, part of the problem you are!
~ People that think they are better than anyone else for any reason are the cause of all the strife in the world.
The shorts did nothing; Musk did everything.
Are you kidding? They placed a bet on a corporation aiming to produce something that it would fail and rallied against it in the hopes of bringing down the value. ALL short sellers are parasites, without exception. Every massively successful short seller does it by manipulating the market and the small guys just stir up shit to achieve the same effect to their maximum ability. It's not a fucking game, short sellers devalue corporations to the detriment of everyone but themselves.
If someone's financial future depends on comments on TWITter, they are dim-wit.
You generally don't start with the smallest possible action when you are planning more than one.
You tear down a man's defenses brick by brick. Winning the easy cases early on yields big dividends down the road. Lose and you learn from your mistakes. Why do you think every criminal prosecutor begins with the small fry?
Manipulating the market? You mean like Musk did, and why he's being charged with fraud by the SEC?
And how does placing a bet cause harm to a company? Does betting against a horse cause it to run slower? Does betting against one football team cause it to fumble more balls? Shorts betting against the company can do nothing - management leading a company can do everything.
Shorting a stock may cause the stock price to temporarily fall a bit, but unless the company is continuously selling shares to fund operation, the short-term price of the stock does zero harm to the company. If the company needs to sell shares to continue operations, then shorts only make money if the stock was significantly overvalued. The company is only hurt if their shares were overvalued to begin with and they needed to sell shares at those inflated prices to fund continuing operations.
Consider that Tesla was worth more than Ford, GM, or BMW, all who sell an order of magnitude or more vehicles, AND all of whom not just make a profit but pay a dividend. Tesla was - and in my opinion, still is - massively overvalued. Shorts are betting against Tesla in record numbers not because they hate Musk or Tesla or electric vehicles (on the contrary, other companies selling electric vehicles, including those who ship the most EVs, do not have much if any short action), but because the fundamentals said the company was massively overvalued and due for a tumble.
Tesla has about 4-5 months of capital left; they have major bond payments coming due in November and February. They are far from profitable. They have a very high stock price, and they are going to have to sell a lot more shares to continue funding operations for at least 2-3 years before any semblance of profitability can come about. A new share sale will be greeted skeptically, and the share price will most likely tumble quite a bit beyond just the dilution of the market from new share issuance (why are they selling more shares? To pay off debt so they can continue running at a loss? Not a big-time winner).
At the end of the day, shorts only hurt a company if it's quite overvalued to begin with (meaning lots of upside to shorting) AND that company is losing money and needs to issue more shares to continue operations. Basically only when the price of the share can negatively impact your operations. Ford's seen its stock price tumble 40% over the last 5 years and they've not had a single issue with deliveries, paying dividends, and such. The falling stock price has not hurt their operational ability - because they do not need to sell shares to keep operating.
The ONLY reason a short can hurt a company is when management needs a high price for the company to survive - like Tesla. That's a management failure, not a short issue.
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How's life in the hypocrite lane?
Shorting is selling stock owned by others sharing your brokerage at a rate under where it would be sold in a market free of short sellers with the aim of it going down further to buy back in the future. The act of selling alone drives down the price by increasing volume on the ask side of the ledger. There is no way to short-sell and not actively drive down the value of a company as a result, but the overwhelming majority of short sellers (Soros is effectively the patron saint of this) take it further by vomiting bullshit about the companies they're shorting, and in extreme cases manipulating politics to the point of starting actual riots and getting people killed in the process. They are self-serving parasites, they aren't skilled, they don't fulfill a valuable role, they just leech off of people aiming to be productive. Short sellers are everything wrong with the modern economy.