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Tesla Faces U.S. Criminal Probe Over Musk Statements

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Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#311

Post by gamblor956 »

abalone wrote: post #263
JumpCrisscross wrote: post #220

Earlier quoted context omitted.

> That's not the issue. Nor is his desire to hurt them. That's a huge issue. If he made his misstatements with the intent of hurting short sellers, that's criminal fraud. If he just made a material misstatement, with no intent to harm anyone, it's a civil case.

You inserted "intent". That is the key question, not whether he dislikes short sellers. Every CEO dislikes short sellers, and nearly every CEO makes "material misstatements" now and then. What separates that from fraud is what the SEC focused on in their comment: scienter.

You keep throwing around the word "scienter" without understanding what it is.

Scienter just means intent. It's literally just the fancy legal term for intent.

Thus, it matters very much that Musk has a history of trashing short sellers and wishing harm to them, because they can use that history to establish that his tweet was made with the intent to defraud market participants and materially affect the price of Tesla's stock.

Especially the "funding secured" bit. You don't say "secured" if it's not really secured. There is no legal interpretation where "secured" is a harmless mistake.

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#312

Post by tomatocracy »

zwerdlds wrote: post #22
simias wrote: post #17

Earlier quoted context omitted.

I'm not super knowledgeable in the stock market, what would he have gained from destroying the shorts? I understand that shorts are effectively a bet that the stock will go down but do they actually damage the company in any way? At a glance it sounds like trying to break the thermometer because you think it's too cold out there, the stock wasn't at risk because of the shorts, instead there were shorts because some i…

Shorts drive the price down, making it more expensive for the company to borrow from the market by selling stock. They have to sell more shares to receive a similar amount.

It doesn't make it "more expensive" for the Company (as opposed to its existing shareholders) raising equity capital unless the stock pays a dividend and the only way they can sell more stock is to promise buyers they won't reduce the dividend per share to compensate for the increased number of shares in issue. Tesla doesn't pay a dividend, so that isn't the case here.

In extremis, a falling/low price could limit the size of a potential new equity fundraising because the resulting dilution is too much for existing shareholders to take, but Tesla's price/valuation would appear to put it quite far from this being an issue.

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#314

Post by gamblor956 »

lgeorget wrote: post #231
baddox wrote: post #219

Earlier quoted context omitted.

Although that is definitely an oversimplification (there are plenty of limitations to freedom of expression), why is your description particularly odd or difficult to understand? If an executive at a public company makes misleading public statements with the intention to cause certain transactions (which may or may not be the case here), that's a pretty clear financial crime with clear victims. I don't see why jail t…

Well, of course I realize that I'm oversimplifying and exaggerating but my point was that I have the impression that messing with money is a much more serious problem than messing with people in the USA.

Insulting people is a very different thing from defrauding them.

Hate crimes are treated far more seriously than monetary crimes, if that's what you're trying to get out. It's simply that merely making racist statements is not a crime in the US.

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#315

Post by pcmonk »

simias wrote: post #36
zwerdlds wrote: post #22

Earlier quoted context omitted.

Shorts drive the price down, making it more expensive for the company to borrow from the market by selling stock. They have to sell more shares to receive a similar amount.

I obviously lack a piece of the puzzle here, let me see if I get this right: a short means borrowing stock, selling it then rebuying it later (betting that the price would have fallen in order to turn a profit) before giving it back to its original owner. I suppose if everybody shorts at the same time the huge amount of stock being sold could drive the price momentarily down, but then again the opposite happens when…

That's equivalent to saying that buying a stock doesn't move the price up because you'll have to sell it eventually. A lot of people in long positions means a lot of buys that haven't been re-sold. A lot of people in short positions means a lot of sells that haven't been re-bought.

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#316

Post by tomatocracy »

simias wrote: post #36
zwerdlds wrote: post #22

Earlier quoted context omitted.

Shorts drive the price down, making it more expensive for the company to borrow from the market by selling stock. They have to sell more shares to receive a similar amount.

I obviously lack a piece of the puzzle here, let me see if I get this right: a short means borrowing stock, selling it then rebuying it later (betting that the price would have fallen in order to turn a profit) before giving it back to its original owner. I suppose if everybody shorts at the same time the huge amount of stock being sold could drive the price momentarily down, but then again the opposite happens when…

Actually, short selling has another nasty sting in the tail.

If there are few willing sellers out there when everybody goes to cover their short, you get a short squeeze - a feedback loop where the price increases, so people need to buy to cover shorts to avoid losses, which pushes the price up, which means more people need to buy to avoid further losses as the price rises and so on.

The original owner who lent the stock can also ask for it back on relatively short notice (say, because they are long and want to sell). Usually this isn't a problem because the short finds someone else to borrow from and uses that to cover - but if enough people do that then it can trigger a short squeeze even without significant price movement at the beginning, as happened rather dramatically in Porsche shares in 2008.

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#317

Post by _audakel »

reggieband wrote: post #176

I'm starting to get conspiratorially minded about all of this. It began when I couldn't understand the seeming coordination of the attacks against the Uber CEO. I mean, he seemed like the same kind of garden variety psychopath I expect in the role of CEO - why were there so many hit pieces about him specifically? Now Musk is a new target and somehow everyone is cheering for him to fail. Seems like if you get into com…

Reminds me of the book "private empire" about ExxonMobil.

"Private Empire pulls back the curtain, tracking the corporation’s recent history and its central role on the world stage. The action spans the globe, moving from Moscow, to impoverished African capitals, Indonesia, and elsewhere in heart-stopping scenes that feature kidnapping cases, civil wars, and high-stakes struggles at the Kremlin."

Big cooperations could easily find a way to run a "blackops" negative PR campaign, on top of pulling strings in the SEC

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#318

Post by acct1771 »

dforrestwilson wrote: post #211
pmcollins wrote: post #94

Earlier quoted context omitted.

> Musk tweeted in an effort to destroy the shorts Is there any evidence that this was his intent? How do you know that he didn't actually intend to take the company private?

A long list of investors publicly denied any talks with Tesla. All potential banks expressed puzzlement with the tweet as well. One of them would absolutely have to be involved for a deal of this size and none were. Reporters asked everyone and found 0 evidence.

Did they ask the Saudi crown?

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#319

Post by gamblor956 »

leesec wrote: post #229
harryh wrote: post #214

Earlier quoted context omitted.

I actually do think your linked tweet is problematic (though on a much smaller scale than the "secured funding" one). While obviously a joke, it was at the very least an irresponsible one from a public company CEO and definitely could be viewed as an attempt to manipulate algorithmic traders via the dissemination of misinformation. CEOs have a legal duty to their shareholders and the public to communicate about their…

I guess anything 'could be viewed as an attempt to manipulate algorithmic traders' then. At what point did obvious jokes become illegal?

It's not an obvious joke to people who don't speak English as their primary language.

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#320

Post by gamblor956 »

ConfusedDog wrote: post #21
whatok wrote: post #18

Earlier quoted context omitted.

Did you read the statement he put out? He basically said everything was a lie.

He you mean Elon Musk? He admitted the funding was not secured at the time and was never intended to buy back stock at $420? Why not post a link and let us see.

He actually did admit that funding was not secured to buy the stock back for $420.

https://www.tesla.com/blog/update-taking-tesla-private

In the post, he also admits that the Saudi Arabian investment would only provide a small fraction of the necessary amount needed to go private.

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