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SEC Asks Manhattan Federal Court to Hold Elon Musk in Contempt

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Re: SEC Asks Manhattan Federal Court to Hold Elon Musk in Contempt

#181

Post by danso »

blhack wrote: post #64

My knowledge of how publicly traded companies work is very limited, but: Was what he said really that bad? He said: >Tesla made 0 cars in 2011, but will make around 500k in 2019 And then later corrected himself with: >Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k. This seems like a pretty simple mistake to have made,…

As others have pointed out, the issue is the SEC settlement that Musk agreed to. But to your question, yes, I think what he tweeted was bad, for a CEO and an engineer. The number he stated is literally off by 20%. How can you say what he did was an “honest mistake”, as if an engineer can’t be expected to know basic arithmetic? Or a CEO not to know that the peak rate of production per week is not the same as annual rate? Musk has all the info needed to make an accurate and still impressive claim — he chose to exaggerate. And he chose to do it after knowing the terms of the SEC settlement.

Re: SEC Asks Manhattan Federal Court to Hold Elon Musk in Contempt

#182

Post by Dylan16807 »

afastow wrote: post #161
voodooranger wrote: post #121

Earlier quoted context omitted.

i believe elon’s argument is that the offending tweet didn’t need approval because he believed that he was just restating a projection made on the previous earnings call

The SEC saw that argument coming and shot it down completely in their filing: > According to Tesla’s Policy, any edits to a pre-approved Written Communication or even releasing a verbatim pre-approved Written Communication more than two days after it has been pre-approved requires that the pre-approval be reconfirmed. Even if the exact substance of the 7:15 tweet had been pre-approved 20 days before, Musk cannot cred…

This tweet was not an edit to a pre-approved communication. That rule is irrelevant.

The argument is not "this tweet got approved before, so I can edit it however I want". The argument is "the number is already public information, so I can make a new post mentioning it".

Re: SEC Asks Manhattan Federal Court to Hold Elon Musk in Contempt

#183

Post by xiphias2 »

roenxi wrote: post #176
xiphias2 wrote: post #142

Earlier quoted context omitted.

A part of the development of new Tesla car features, and the deal with Australian battery plant were happening on Twitter with his account. Closing it down would hurt Tesla. The solution is having a reviewer for each tweet, just how Elon and SEC agreed.

Odds are great that the battery thing on twitter was a PR stunt for public consumption, not substantive decision making. People don't negotiate infrastructure deals on twitter and email is just as good for actually doing business deals. In the event that anything actually happened on twitter, someone was probably being negligent in terms of tendering and governance. It doesn't make sense for a few tweets to be critic…

It was PR, and maybe a stunt as well, but it worked. It put a huge social pressure on the corrupt Australian politicians who kept the electricity system in their country far behind what Australia can afford. The public actually deserves to take part in what their tax payments are used for.

Re: SEC Asks Manhattan Federal Court to Hold Elon Musk in Contempt

#184

Post by xur17 »

SimbaOnSteroids wrote: post #100
djakjxnanjak wrote: post #71

Earlier quoted context omitted.

It seems like Elon lacks the ability to control his behavior when he can tweet based on a momentary impulse. Elon has many bright ideas but not every notion of his is appropriate for public consumption. He ought to hand over the credentials to a PR or even a law firm so he can send all his tweets through them. And ask them to change the password.

It wouldn't be too hard to give him a twitter clone app that flows through a middleman before going live, git pull requests for twitter if you will.

At this point they should seriously do this. Build a twitter clone app for a few 100k, and then hire an around the clock crew to review tweets as they go out. It would be 100% worth it.

Re: SEC Asks Manhattan Federal Court to Hold Elon Musk in Contempt

#185

Post by afastow »

eduah wrote: post #162
jacques_chester wrote: post #143

Earlier quoted context omitted.

> This is a technicality It's the law. That's how it works. Especially if you agreed to it .

That is the point. He only violated it if you take the obviously wrong interpretation that the 500k was a new material statement. It was not. The agreement only covered new, material information, not repeating a previously given the high-end estimate. Also, note that the market was closed at the time of the tweet and the second tweet clearing up any possible confusion, thus, having no impact on the stock.

No, he was required to get pre-approval even if he was repeating previously released information verbatim. They probably wouldn't have caught him if he was actually repeating it verbatim, but he still would have been breaking the requirement to get pre-approval.

> According to Tesla’s Policy, any edits to a pre-approved Written Communication or even releasing a verbatim pre-approved Written Communication more than two days after it has been pre-approved requires that the pre-approval be reconfirmed. Even if the exact substance of the 7:15 tweet had been pre-approved 20 days before, Musk cannot credibly claim that he thought he was not required to obtain pre-approval again under the plain terms of the Policy. In fact, the written communication in the 7:15 tweet was not pre-approved 20 days earlier or at any time. Musk’s claim that he thought he was simply restating information from the January 30 communications is not credible.

https://assets.documentcloud.org/documents/5750664/Show-Caus... 12th PDF page (labeled 9 at bottom of page)

Re: SEC Asks Manhattan Federal Court to Hold Elon Musk in Contempt

#186

Post by zebraflask »

jrumbut wrote: post #164
zebraflask wrote: post #117

Earlier quoted context omitted.

The legality is above my pay grade and will have to be deferred to the experts. Just from an economic line of thought, even a cursory look at Tesla and Elon's history of public statements would make a reasonable investor think "Gee, the CEO talks a lot. Maybe don't read too much into it."

The entire point of this law is so you can get accurate information to decide on your investments. Otherwise you (the investing public) are going to say "well he could have a great factory, or he could be spouting off again, guess I'll keep the money under the mattress." It would make it very hard to raise money to do big things.

Have a good point, I didn't consider it that way.

Re: SEC Asks Manhattan Federal Court to Hold Elon Musk in Contempt

#187

Post by Derek_MK »

anoncoward111 wrote: post #158
cmurf wrote: post #131

Earlier quoted context omitted.

What he believes doesn't matter, it's what he agreed to that matters, and he violated that agreement.

Apparently we live in a country where the government can murder thousands upon thousands of innocent Iraqi civilians, deny that it ever happened, and profit off of the destruction. But god help you if you make a tweet that is subjectively incorrect.

You can use this argument for literally anything, it means nothing.

> Apparently we live in a country where the government can murder thousands upon thousands of innocent Iraqi civilians, deny that it ever happened, and profit off of the destruction.

> But god help you if you brutally beat someone to death

Re: SEC Asks Manhattan Federal Court to Hold Elon Musk in Contempt

#188

Post by Derek_MK »

CPLX wrote: post #65
berberous wrote: post #44

Earlier quoted context omitted.

The last two pages (pp. 11 and 12) are a great example of why you shouldn't be an arrogant dumbass towards the government. The SEC quotes his 60 minutes interview with Leslie Stahl where he says he doesn't respect the SEC. While I think the SEC has a legitimate grievance here, I'm also guessing this is partly vindictive. Play stupid games... And I say all that as a big supporter of Elon generally.

It goes to intent. Typically the law tries to at least somewhat take into account intent, like if someone omits something from a filing by accident or in a deliberate attempt to conceal, for example. Pointing out his statements demonstrates that he's aware of the rules and is choosing not to respect them. That's usually a sign that someone should be on the higher end of the typical punishment range for a given act.

Especially in the case of contempt of court. The whole reason why you'd hold someone in contempt is if they are willfully not doing what the court says. The SEC is telling the court "Look, he's literally here talking about how he doesn't respect us. He's willingly doing this."

Re: SEC Asks Manhattan Federal Court to Hold Elon Musk in Contempt

#189

Post by Derek_MK »

xenadu02 wrote: post #52
bostonpete wrote: post #18

Earlier quoted context omitted.

That's incorrect if you read the SEC filling the problem was that he was projecting 2019 production publicly

> the problem was that he was projecting 2019 production publicly That is also incorrect. The settlement only mandated that Musk get company approval for Tesla-related tweets. It would have been as simple as him sending an email with the proposed tweet to get signoff before blasting it out there. This is actually extremely common and partially for these sorts of reasons. The SEC asked Tesla if Musk followed the agree…

> The SEC asked Tesla if Musk followed the agreement by getting approval for the tweet. He didn't, thus this filing.

This is the unbelievable part.

"We agree to NOT do X, under penalty of law."

[Does X]

"Did you do X?"

"yeah lol"

Re: SEC Asks Manhattan Federal Court to Hold Elon Musk in Contempt

#190

Post by sangnoir »

Dylan16807 wrote: post #182
afastow wrote: post #161

Earlier quoted context omitted.

The SEC saw that argument coming and shot it down completely in their filing: > According to Tesla’s Policy, any edits to a pre-approved Written Communication or even releasing a verbatim pre-approved Written Communication more than two days after it has been pre-approved requires that the pre-approval be reconfirmed. Even if the exact substance of the 7:15 tweet had been pre-approved 20 days before, Musk cannot cred…

This tweet was not an edit to a pre-approved communication. That rule is irrelevant. The argument is not "this tweet got approved before, so I can edit it however I want". The argument is "the number is already public information, so I can make a new post mentioning it".

> This tweet was not an edit to a pre-approved communication.

That is the problem, in a nutshell: it should have been pre-approved - according to the FCC's interpretation of the settlement agreement.

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