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Elon Musk Pulled Out of Settlement With SEC At Last Minute (cnbc.com)
Sources have shared some new details with CNBC relating to the recent SEC charges against Tesla CEO Elon Musk. Yesterday, U.S. securities regulators sued Musk for allegedly making false statements related to his abandoned efforts to take Tesla Motors private. Now, according to CNBC, Tesla and the SEC were close to a no-guilt settlement but Elon Musk pulled out at the last minute. From the report: Under the deal, Musk and Tesla would have had to pay a nominal fine, and the CEO would not have had to admit any guilt, the sources said. However, the settlement would have barred Musk as chairman for two years and would require Tesla to appoint two new independent directors, CNBC's David Faber, citing sources. Musk refused to sign the deal because he felt that by settling he would not be truthful to himself, and he wouldn't have been able to live with the idea that he agreed to accept a settlement and any blemish associated with that, the sources said. Musk called the SEC's allegations "unjustified" and that he acted in the best interests of investors. "Tesla and the board of directors are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful U.S. auto company in over a century. Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees," said Tesla's board of directors in a statement.
Check out Albert Dunlap and John Schiller, both permanently banned from holding an executive position in publicly traded companies due to fraud and fiscal issues (like stock manipulation). They can, and have, gotten CEOs and senior executives banned from holding director positions - and Musk is running a big risk of that happening to him.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
First, IANAL. With that said...
This is a civil action, not a criminal one. Thus, even if he loses Musk does not become a felon and (I'm pretty sure) doesn't lose the security clearance that he needs for his SpaceX activities.
The SEC can ban him from serving as CEO or chair of a publicly traded company; they can remove him from top spot at Tesla, but not from SpaceX which is privately held.
Contrary to what many imagine, Tesla would not implode without Elon Musk. He probably thinks it would, because monumental ego, but he's wrong. Tesla is already set up to be a gold mine, a money-printing machine. It's not just the Model 3 that's on track to be profitable, but also the utility-scale battery storage systems. They haven't got a lot of press, haven't generated much drama, but since the facility in Australia proved wildly successful, demand for those is going to explode.
If this investigation causes the stock to tank, I'll call it a great opportunity to buy in.
He committed fraud, black-letter regulation, that everybody and their dog knows about. I am not a business executive, I know all about it.
What you are saying is that since you think he's a cool guy, the law just doesn't apply,
Forgot to add...
I believe the SEC will also need to prove that Musk *intended* to manipulate the stock price with his dumb tweet. (There's no law against just being dumb.) I don't think Musk actually was trying to manipulate the stock, and how they're going to make they're argument I'm not sure. This may not be the slam-dunk that some people expect.
Furthermore, the SEC action may cause far more upheaval in Tesla's stock price and more harm to investors than the incident they are suing over. Is that really sensible? But you know, they want to make an example... They've said as much. This is about regulatory muscle-flexing and generating headlines.
He must have evidence that he discussed the price ($420) with someone who agreed to buy the exiting stock at that price. My guess is he shows a letter of intent, memorandum of understanding, or at least a confirmation email from them to the SEC (and the public), and he gets a slap on the wrist because the SEC will say "funding secured must mean it's in an escrow account", or something like that. If he's got nothing, he should have taken the deal.
I do wonder if they are trying to bar him from taking SpaceX public (since he would be restricted in his seat at public companies).
I think it was back in December we stockholders got asked to approve a whopping great compensation package for Musk. To collect it I think he had to stay on as CEO for a certain amount of time and hit certain financial milestones. I think it was 10 years.
So if he takes this SEC "deal" and has to step down as CEO would he lose all that? I think so.
And I think it is bullshit. Imagine what would happen if Musk left. Nobody but the shorts (who are desperate for this to happen) would win because the stock would dive 40% minimum.
And I don't see what Musk did wrong. He said he had a deal. He never said he was taking it which would have been a board (and possibly stockholder) action anyway. The SEC is being totally arbitrary. Let them take it to court if they want to be embarrassed.
If hes an idiot then why are you not a self made billionaire?
Only the State obtains its revenue by coercion. - Murray Rothbard
Trump wants charismatic industry leaders to kowtow.
Read Mussolini's own writing. Trump did (really, he kept it in his bedside stand).
At one point in time il Duce was revered by the world for the fascist economic miracle.
Mussolini called it "corporatism". The governing paradigm is the state selects an elite set of corporate power brokers who receive favor, such as continuing to breath air, in return for supporting a benevolent patriacial dictatorship that masquerades as a democracy with a permenantly re-elected supreme leader.
it actually worked well up until Mussolini decided to invade Ethiopia and hitler copped his game plan. Then it went to shit for him.
Musk is the demo to all the other corporate charismatic leaders that you will pay if you don't kow tow to il Cheeto
Some drink at the fountain of knowledge. Others just gargle.
over a decade ago I got a traffic ticket that was (in my view) bullshit. I didn't take it to court since, as a contractor, the hours lost would have cost me a lot more than the fine. Years later I can still feel pissed about that ticket.
You're probably right that taking the settlement would have been the rational thing to do. But I do understand him.
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Transparency requires telling the truth - Musk did not tell the truth. He did not have funding secured.
I call bullshit on your bullshit. You have no idea what sort of private conversations and handshakes were made. And by your statements here, you've already tried and convicted him.
Elon Musk said specifically that he was "considering" taking Tesla private, not that he had decided, or that it was a done deal. The SEC lawsuit is baseless and should get tossed.
Elon Musk does not play by the rules. He's taken on big oil. big auto, and big aerospace, and he's taken their business. That's what this lawsuit is about - placing government puppets on the Tesla BOD and preserving the status quo.
The exact same thing happened when Jack Northrop started taking contracts from Convair (absorbed by Lockheed) and Boeing with his revolutionary YB-35. The Northrop YB-35 flying wing was faster and all around more capable than the B-36 that ultimately won. The YB-49 - with modern engines is basically the current B-2, and similar to the soon to be B-21 Raider. Truman era corruption tried to force Northrop to merge with Consolidated Vultee/Convair (now Lockheed) - to keep money and power in the "right hands". Jack Northrop refused, and he lost the contract to produce the bomber that would replace the B-29. In the process Truman's buddies yanked Northrop in all sorts of directions, including changing requirements for no reason other than to hobble the YB-35/YB-49 to make it less competitive against the disaster that was the B-36 - 6 piston engines, 4 jet engines, slower cruise speed than a B-29 and so unreliable that during pre-flight checks the flight engineer would often joke "2 turning, 2 burning, 2 smoking, 2 joking, and 2 unaccounted for, Sir!". Ultimately, when the YB-35/YB-49 was canceled, the government forced the transfer of Northrop's jet and turbine engine technology to GE. Fortunately, Northrop persisted and didn't sell out or give in to government corruption - and neither should Musk .
Had Truman era corruption not interfered with the free market advances and visionary designs of Jack Northrop (a self-taught engineer with no formal college degree), the US could have skipped over a trillion dollars of government fraud and corruption that went on for decades, and in many ways continues to this day - the same kind of fraud and corruption that is now being exacted upon Elon Musk and Tesla.
As others have suggested above - ironic justice would be for the SEC lawsuit to drive Tesla stock prices down enough for Elon to finally take Tesla private.
The problem is, what Elon allegedly did is in fact illegal. Unlike in your case, the cost to send SEC the evidence is nothing compared to the cost of a settlement. So if he had any evidence that could exonerate him, he would've already used them, then SEC wouldn't have bothered charging him in the first place.
If he had solid evidence, he would've used it already and the suit would've never happened. I think he's hoping for a better deal, maybe a bigger fine but less time banned from being CEO.
Speaking of short seller rumours... straight from the SEC filing:
The SEC presents short seller talking points as a statement of facts and credits them to "investors". The reality of the situation was that when Musk tweeted, Tesla's stock had just surged from a Q2 report that beat market expectations and increasing market optimism that Tesla actually was going to be profitable in Q3. But instead the SEC fills its filing with quotes that could very well have been straight from the mouth of Jim Chanos. Yeah, F*** you, SEC.
I can just imagine the look on the jury's face when Musk's defense team points out the simple fact that Musk personally had enough assets to take Tesla private under the terms he described (most / 80% of Tesla's current investors staying onboard, of which Musk personally was 1/4 of them), as he owns ~60% of a little company called SpaceX worth $30B+ which controls 80% of the global commercial satellite launch market. And that PIF had just purchased 5% of the company on the open market (indeed, that broke immediately before Musk's tweets, and was the trigger for him making the plans public).
"Who the hell is Nietzche? It's a question stupid people are asking." -- Newscaster, "Jesus Christ Supercop"