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Elon Musk Should Be Held In Contempt For Tweet, SEC Tells Judge (fastcompany.com)
The Securities and Exchange Commission has asked a federal judge to hold CEO Elon Musk in contempt for breaking terms of a settlement agreement with a tweet. The SEC cited an "inaccurate" February 19 tweet about production. Musk tweeted alongside a photo: "4000 Tesla cars loading in SF for Europe." He replied to the tweet adding: "Tesla made 0 cars in 2011, but will make around 500k in 2019." Fast Company reports: It's that "will make around 500K in 2019" part that angered the SEC, which had this to say in legal papers filed with a Manhattan federal court: "He once again published inaccurate and material information about Tesla to his over 24 million Twitter followers, including members of the press, and made this inaccurate information available to anyone with Internet access." The SEC says the tweet violated an agreement that was part of a settlement Tesla made with the regulator last year. Musk promised to consult with Tesla's board before he made any statements on social media that could affect the stock price of the company. Tesla also agreed to pay $40 million in penalties and Musk agreed to step down as chairman of the board.
If mush tweets a personal opinion, or an aspiration, etc it should be covered by "free speech" - Lotsa bureaucrats don't like that whole Constitution thingy but somebody needs to challenge them all the way to the Supreme Court over this sort of regulatory farce.
The SEC might well be free to jump on him if Musk had put this into a prospectus, but it was a serious error for Musk to cave in when they went after him for the earlier tweet, which set him up for the settlement which now can be used to go after him for any future statements.
Keep in mind that this is the exact same SEC that did NOTHING to the executives who drove all the other US car makers (except Ford) into government bailout terrirory in 2008. Had the Bush admin not used tax dollars to bail out GM, Chrysler, etc in 2008 and had Obama not further bailed them out when he got into office, they all would have gone to ZERO on the stock market. Why has the SEC not gone after one damned one of those executives for any of their pre-2008 meltdown statements, INCLUDING OFFICIAL STATEMENTS TO INVESTORS? Same for the Wall Street bankers, none of whom were spanked by the SEC, but the big car makers are an apples-to-apples comparison to Musk.
People need to contact congresscritters and demand answers to why the SEC is treating Musk so diffrerently.
Yes, the SEC knows for certain he didn't "consult with the board." Look man, last week the SEC sent Tesla's lawyers a letter asking if that tweet had been pre-approved. Their response was, "uhh, no.". It was worse than that! They made it clear that nobody looks at tweets until after they're sent. SEC asked for a list of all tweets that had been pre-approved. They got back a blank sheet of paper. Tesla hired a well known, well respected securities lawyer to babysit Musk's twitter account. HE QUIT THE NEXT DAY. Probably filed a whistle blower claim so he can collect 10% of the fine, too.
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It was obvious to me from the outset that the conditions of the settlement effectively place a gag order on Musk that forbids him from mentioning virtually anything about Tesla, since almost anything he might publicly say could affect stock prices.
If I were him, I'd quit. Sell off his shares of the company to the highest bidder and get as far the hell away as possible from such a blatantly oppressive work environment that only seems to want to ruin the guy. He made his fortune once.... he's a smart guy, he can do it again somewhere else.
File under 'M' for 'Manic ranting'
You're confusing options with delta 1 instruments. If someone was betting that the stock price would collapse, the easiest way to make a profit on it (i.e. requiring least initial outlay, margin and maintenance) is to buy a put option. You do that, and if the price falls below the strike price you make some money. If it doesn't fall below the strike price, you just lose the premium you paid for the option. No need to sweat bullets - you've already paid, you're not up for any other losses.
Now if you want to post a bit more margin, you can write a call option. In this case, you're paid the premium, and if the stock ends above the strike price, you pay the difference. In this case you want to hope that the premium you got when you wrote the option is going to be bigger than the difference between the stock price and the strike price at expiry. But if you're writing options without delta hedging, you're basically gambling, so if you lose you got what was coming to you.
If you want a short delta 1 instrument, the lowest initial outlay is a contract for differences (CFD). With this you get a delta 1 position, but you pay maintenance each month. The stock price needs to fall at rate faster than the maintenance you're paying on your CFD position. You're not going to be shitting bricks in this case either. You've been paying the whole time you've had your position open, and if the stock price isn't falling fast enough you just swallow the loss so far and close the position.
Actual short stock positions require an arrangement with a security lender if you want to hold them for more than a day. The lender is going to charge you maintenance on the position and require you to post margin. So as with the CFD, you'd cut your losses at some point if the stock price isn't falling as fast as you'd like.
I'm not going to try and give an overview of futures here, but as with the other delta 1 strategies there's no strike price involved. The only people who'd be shitting bricks would be people who wrote deep in-the-money calls and didn't hedge their positions. But they should've known what they were getting into.