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SEC Sues Musk and Seeks Ban for His Tweets on Go-Private Deal

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Re: SEC Sues Musk and Seeks Ban for His Tweets on Go-Private Deal

#461

Post by GW150914 »

throwaway0255 wrote: post #449
djsumdog wrote: post #68

Earlier quoted context omitted.

I'd hope the company itself would be fine. I really hate this idea of the grand visionary. A good friend of mine who is a mechanical engineer despises Musk. I listened to a bit of his Joe Regan interview and when Regan asked him how he has the time to do all of the things he does, there are smoke jokes about him being an alien, but not once did he say, "Well I have an amazing team of engineers" and credit all the tho…

> I really hate this idea of the grand visionary. ... I listened to a bit of his Joe Regan interview and when Regan asked him how he has the time to do all of the things he does, there are smoke jokes about him being an alien, but not once did he say, "Well I have an amazing team of engineers" and credit all the thousands of people in his organizations that actually do the work. I think Elon's active perpetuation of…

Permitting and perpetuating this kind of myth-making is practically part of Elon's fiduciary duty to his shareholders at this point. You can't fault him for doing it, because he has to.

Plus he clearly lives for it, and when anyone makes even reasonable points against him, he loses his mind on a Twitter. That is after all what happened with “pedo guy” re the Thai cave rescue. Musk made an ass of himself by trying to inject himself into a potential tragedy for some PR and a man who actually helped to save the day called him on it.

I’m also not sure that it would be hard to idolize a group, people manage it for sports teams. Maybe if Musk put the effort he spends into grooming his ego into promoting his team he wouldn’t need to be the center of a cult of e-sychophants.

Re: SEC Sues Musk and Seeks Ban for His Tweets on Go-Private Deal

#462

Post by zekevermillion »

_drimzy wrote: post #453
zekevermillion wrote: post #436

The subtext is that Elon intentionally bumped the stock price to screw over short sellers like Jim Chanos. But the rationale behind 10b5 is to protect investors from fraud. Right, we are not concerned with protecting short-sellers who spend all day on twitter making up negative stories about their targets. So the underlying rationale here has to be that Elon's $420 tweet harmed regular investors who purchased TSLA at…

> Right, we are not concerned with protecting short-sellers who spend all day on twitter making up negative stories about their targets. This doesn't make sense. We don't go after them because they don't have any authoritative powers/inside knowledge about the company, so a reader cannot be misled by them. If an exec of a company short sells a huge chunk of the company and plants a misleading negative story about the…

What I mean is, we are concerned with price manipulation. But the theoretical harm of price manipulation is that some investor has overpaid based on the intentionally misleading $420 tweet. The SEC is not primarily trying to protect Jim Chanos from getting screwed on his short position. It is trying to protect the "investing public" more generally. When they talk about damages it's not going to be damages suffered by the shorts. It will be damages suffered by investors who overpaid based on $420 expectation.

Note that you are actually wrong about 10b5 here, Jim Chanos can very well commit a 10b5 violation without being an insider. Securities fraud does not depend on fiduciary status of the perpetrator, and while insider trading is fraud, there are many other types of fraud as well.

edit: Jim Chanos is too smart to commit a 10b5 violation. I am just using him as a hypothetical example!

Re: SEC Sues Musk and Seeks Ban for His Tweets on Go-Private Deal

#463

Post by mikestew »

rayiner wrote: post #168
treis wrote: post #84

>According to Musk, he calculated the $420 price per share based on a 20% premium over that day’s closing share price because he thought 20% was a “standard premium” in going-private transactions. This calculation resulted in a price of $419, and Musk stated tha the rounded the price up to $420 because he had recently learned about the number’s significance in marijuana culture and thought his girlfriend “would find…

It's better for him if it's an obvious marijuana reference. That way he can argue it was a joke that no reasonable investor would have relied upon.

That way he can argue it was a joke that no reasonable investor would have relied upon.

I smoke pot regularly, and hold a non-trivial position in TSLA. My first thought was most definitely not, "heh, heh, funny pot reference, bro." My first thought honestly was, "well, he wouldn't say it if it weren't true, because the SEC will haul him off." So I don't know about your reasonable investor theory.

Re: SEC Sues Musk and Seeks Ban for His Tweets on Go-Private Deal

#464

Post by village-idiot »

propman wrote: post #384
WheelsAtLarge wrote: post #363

The book The PayPal Wars: Battles with eBay, the Media, the Mafia, and the Rest of Planet Earth, details Musk's time at Paypal and pretty much describes him as an eventual hindrance rather than a help. He was eventually ousted from the company. Peter Thiel was the one that was able to nurse the company to success. He was vital to get the company started but eventually, he was difficult to work with. Looks to me that…

I can only think of Elon as the only person to create THREE multi billion dollar companies in wildly different industries. Elon is a fantastic CEO AND visionary. I personally know people who could be making double specifically work at spacex because they believe in his vision. Elon is able to get Supreme talent and productivity for pennies on the dollar. He’s able to market Tesla and spaceX to billions with such a po…

He seems smart, but toxic. These "revolutionary" companies run by "brilliant" CEOs tend to chew people up and spit them out because they're less important than the company mission.

Hard pass.

Re: SEC Sues Musk and Seeks Ban for His Tweets on Go-Private Deal

#465

Post by eli »

AnthonyMouse wrote: post #134
eli wrote: post #35

Earlier quoted context omitted.

Is there any evidence the short sellers have ever caused the price to move at all?

Shorting a stock means borrowing shares and selling them (making the seller short of shares they still owe). This puts the shares back on the market and absorbs purchasing demand. By supply and demand the price goes down. Regardless of any change in public sentiment or incentives to publicize dirt, at scale shorting a stock inherently reduces the price while the short positions are open.

In practice, at the scale of short selling actually taking place, does it materially impact the price of Tesla shares? Is there even any way to know?

Seems like a boogeyman to blame all manner of company ills on. For example, I think very few of the negative press Tesla has received over e.g. union busting or manufacturing defects is due to a short seller conspiracy. That's newsworthy stuff and the media is doing its job.

Re: SEC Sues Musk and Seeks Ban for His Tweets on Go-Private Deal

#466

Post by maccam94 »

dabockster wrote: post #412
not2b wrote: post #406

He was trying to bankrupt the short-sellers, and he was doing it by lying: the price would soar, their options would be called, and they'd lose their shirts, all for a lie. When you're head of a public company, that's a crime. Not only will the SEC come after him, but the short sellers can probably sue him too. I have huge respect for his engineering ability, but he has messed up badly. He's overextended and it seems…

> He was trying to bankrupt the short-sellers Or he was trying to divest at artificially inflated prices caused by the hype. Both of these hypotheses are illegal under US stock law.

I don't think personal fortune is anywhere near as significant of a motivation for Musk as the public image of his companies or their success. I have no doubt that he let negative headlines get under his skin, and that he wanted to fight back.

Re: SEC Sues Musk and Seeks Ban for His Tweets on Go-Private Deal

#467

Post by dirkgently »

chollida1 wrote: post #6

This comment I made a few weeks ago is coming alot closer to the truth than I would have expected. I hope for Space X and Tesla's sake that the reports of a directory and Executive ban don't come true. https://news.ycombinator.com/item?id=18016250#18016292 SpaceX is doing well, Tesla has pulled itself back from the brink and may actually become a profitable car company. All Elon had to do was keep his head down and n…

> I hope for Space X and Tesla's sake that the reports of a directory and Executive ban don't come true.

Why? Because Elon is a special snowflake and deserves a different treatment than other white-collar criminals?

Re: SEC Sues Musk and Seeks Ban for His Tweets on Go-Private Deal

#468

Post by _ptgt »

anonytrary wrote: post #459
dabockster wrote: post #405

Earlier quoted context omitted.

In the US, you're not supposed to say anything publicly that can manipulate the stock price. For a person in Elon Musk's position, it is incredibly easy to drum up hype about a stock from a public media source (in this case, Twitter) then secretly sell off stock at the higher price causing it to dip further than it was at before. This is called pump and dumping and is very illegal in the United States (read up on The…

> In the US, you're not supposed to say anything publicly that can manipulate the stock price Not quite. You can't intentionally say things for the purpose of manipulating the price, you can still say things if they affect the price -- it is impossible not to, since every little thing a CEO does affects the price to some extent (econophysics?). The lawsuit would have to prove that Musk tweeted with the intention of m…

Of course a CEO "manipulates" the stock with every other word. But the words, especially ones expected to greatly affect the stock price, have to be accurate. Investors would lose confidence in the market (and thus not invest, hurting the economy) if CEOs can do things like troll about buyouts. The SEC exists to protect against these shenanigans and is right to take action if Musk trolling is indeed the case.

Re: SEC Sues Musk and Seeks Ban for His Tweets on Go-Private Deal

#469

Post by voodooranger »

you can’t disrupt or otherwise show up all of these players: the us/eu/russian/chinese space industries (and by extension the governments of china and russia), the oil industries of russia/saudi/usa, the major auto manufacturers, power companies, professional car and truck drivers, and the us dealership association (what am i forgetting), all of whom are politically very well connected, and some of whom have their hordes of paid shill internet commenters, and upvoting/downvoting bot nets (not that that would ever happen on hn (and if it would it’s against hn rules to suggest it)) and expect not to get trounced. elon might have fucked up by sending that tweet, but the response here, on reddit, and by the gov’t is way out of proportion, esp considering everything positive that this man has accomplished and is currently working on.

Re: SEC Sues Musk and Seeks Ban for His Tweets on Go-Private Deal

#470

Post by caleblloyd »

chollida1 wrote: post #6

This comment I made a few weeks ago is coming alot closer to the truth than I would have expected. I hope for Space X and Tesla's sake that the reports of a directory and Executive ban don't come true. https://news.ycombinator.com/item?id=18016250#18016292 SpaceX is doing well, Tesla has pulled itself back from the brink and may actually become a profitable car company. All Elon had to do was keep his head down and n…

In addition to causing a short squeeze, his tweet also swung the options prices unfavorably for the time-bound put holders.
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