SEC Sues Musk and Seeks Ban for His Tweets on Go-Private Deal • Hacker News Board

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

#881

Post by jacquesm » Tue, Oct 02, 2018, 5:21 PM UTC

mikestew wrote: post #411

mrep wrote: post #373

Earlier quoted context omitted.

Same. I thought there was no way he say such a stupid thing as "funding secured" without haven't it locked down precisely because I thought the SEC would easily come after him if he lied about it. Fortunately, my brother talked me out of it but I was seriously considering buying some.

because I thought the SEC would easily come after him if he lied about it Which is exactly it. Folks here and elsewhere refer to it as "...obviously a joke". No, it's not so obvious, because if you joke about such things the SEC will nail your ass to the wall . And hence my consideration of purchase. Were the SEC not to follow through, well, what are they going to say when the next joker says, "j/k"? And so, apologis…

For me the turning point was when he joked Tesla was going bankrupt. It showed a complete misunderstanding of the role of the CEO in a public company as opposed to the CEO of a private company. You live in a glass house, that means you move with care and don't throw bricks around.

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

#882

Post by greenshackle2 » Wed, Oct 03, 2018, 4:15 PM UTC

compcoffee wrote: post #457

greenshackle2 wrote: post #285

Earlier quoted context omitted.

More buys = higher price. More sells = lower price. Shorting is selling* . This is neither magic nor controversial. * And buying back later of course. But in the meantime, does a short-sell look any different than a sell on the order book?

Every transaction has a buyer and a seller. Shorting is selling? Selling to whom? Ah, right, a buyer. Telsa share price has risen through extreme short interest for years. How?

It doesn't sound like you understand how stock markets work.

A limit order doesn't necessarily get filled immediately, or at all.

If there is a lot more volume in sell orders than buy orders on the book, it is a buyer's market and price will go down. Inversely if there is more buy order volume, it is a seller's market, and price will go up.

I don't know if shorts have affected the price of Tesla significantly. This is really fact-specific and I didn't do the research. But the principle is sound.

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

#883

Post by zekevermillion » Mon, Oct 08, 2018, 2:17 PM UTC

_drimzy wrote: post #833

zekevermillion wrote: post #509

Earlier quoted context omitted.

Yeah, and I believe some of the shorts may have cause to sue (or have already?) directly. But I tend to think the SEC's focus as to damages is not going to be that Elon screwed the shorts. It's going to be that some people bought shares of Tesla at too high a price. I could be wrong, maybe this is more of a general "integrity of markets" kind of thing, and the SEC doesn't care about direct harm at all, they just want…

Yeah I would be surprised if SEC treats short-sellers as different from investors. The general tone you are maintaining is short sellers are some sort of abominable gamblers who thrive on failures of other investors. Uh, no. A short seller is just another investor investing using the tools the market provides.

There was no "tone" intended. I was making a falsifiable prediction that the SEC would not penalize Musk or Tesla based on the harm suffered by short-sellers, but rather based on the harm suffered by purchasers of Tesla stock who "overpaid". Looking at the modest size of the civil settlement, we now have enough information to say that my prediction was NOT falsified by events.

As I also pointed out, this does not mean that one cannot commit fraud vs a short-seller. However, from what I gather, the rights of short-sellers under 10b-5, based on a "fraud on the market" theory, are rather murky in established caselaw and differ between federal circuits.

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

#884

Post by zekevermillion » Mon, Oct 08, 2018, 3:48 PM UTC

rohit2412 wrote: post #876

_drimzy wrote: post #833

Earlier quoted context omitted.

Yeah I would be surprised if SEC treats short-sellers as different from investors. The general tone you are maintaining is short sellers are some sort of abominable gamblers who thrive on failures of other investors. Uh, no. A short seller is just another investor investing using the tools the market provides.

Exactly. I find it hilarious that some people think that SEC should make sure that a certain category of investors be in profit. Nopes, SEC makes sure that laws and regulations are followed. Investigations in Enron also led to people losing money.

Unfortunately your notion of the SEC as neutral referee for a fair market is not reality. The SEC lacks the resources to enforce the law consistently even within a narrow mandate. Its approach is to target specific violators as a deterrant and/or to make known what it considers to be the proper interpretation of securities laws. Some people consider this to be a major defect in US securities enforcement regime and suggest that the SEC should be resourced appropriately to the immense task. Personally I have no idea what they would need to more systematically pursue violators, but wild guess would be a couple orders of magnitude more funding and personnel.

In the realm of securities fraud, I would say that the private securities bar does about 90% of the impact (in terms of judgments and settlements). And successful criminal referrals a la Enron are quite rare, proportional to the actual amount of fraud going on.

By the way, Enron was a fraud against its own investors. Enron was not about fraud against short-sellers, it was fraud against purchasers of Enron stock. Not that short-sellers don't deserve honesty, just saying that they do not typically receive much love from regulators. From what I can tell, it seems this is not solely due to the disposition of said regulators, but also because of legal uncertainty around short-sellers' rights under securities laws.