Elon Musk to resign and pay $20M

[DanoT]

https://globalnews.ca/news/4500636/...rman-sec-settlement/?utm_source=notification/

When I heard some of the details of his recent tweets about going private, I figured he was in big big trouble for stock manipulation. I was correct. He tried to screw the short sellers of his stock, but he ended up screwing himself.

 

[Muleski]

Had the same reaction when I saw his recent comments. Thought that he's high profile guy and that he was about to get hammered for that one. Fine {or a bigger one} doesn't surprise me. Resignation does.

 

[DanoT]

Musk has been the Tesla spokesman through his tweets so I guess that will end. And he can return to Chair the Tesla Board in 3 years, so I would guess he will just run the company from behind the scenes for now.

 

[Muleski]

He's got to watch that. The SEC tends to not screw around, and their decisions tend to "stick" through all sorts of court challenges. I won't expand on how I know that. And yeah, it the public eye, he is Tesla. He is probably cursing over ever taking the company public. But the SEC has the ability to hand out lifetime bans, and such. They want him out for three years. And I presume that they will be watching for any activity. I wonder how this might affect the company? I really don't follow the stock at all, just very casually. The cars and technology interest me a bit. I have one in the driveway to left of my house, and one to the right. Not my thing.

 

[oldschoolskier]

Think he’s been stretching himself a little thin with all his big endeavors, something ussually gives and result in and error or more. Lately he’s been making them.

Think he got off lightly and hope it doesn’t sink Tesla.

 

[DanoT]

Think he got off lightly and hope it doesn’t sink Tesla.

In the original video that i saw, from last week I think, SEC was asking for a lifetime ban for Musk from holding an executive position in a public company. I think the 3 year settlement agreed to reflects the impact a lifetime ban for Musk would have had on the share price of Tesla and the ultimate future of the company.

 

[scott43]

Read an article saying Musk was worth $140 on their share price. If he went, Tesla almost certainly would tank. Now there is reason for optimism I think. I think they're still in trouble..but it's not doomsday..today..

 

[pchewn]

Resignation from Chairman of the Board. Retains CEO position.

 

[Muleski]

Just saw that. He can stay as a director. He stays as CEO. $20 Million fine. He got off with a slap on the wrist, if that is in fact the case. I've seen a few conflicting things, but that seems to be it. Tesla also saying $20Mil. The $40Mil is to supposed to go to pay investors who were damaged by his comments.

Very interesting. Guess that having Tesla not be too impaired as a company was of real interest to some powerful people, government agencies, etc.

I heard this described as "a parking ticket" for Elon Musk, considering his net worth. Same for Tesla with their $50 Bil market cap. It's got a lot of people in the business chuckling.

 

[Primoz]

I actually can't stand people like this (BS sellers), but in this particular case I really don't see anything wrong or bad from his side. Someone playing with someone else's money (if I understood right how shortselling goes) got burned and need to now pay from his own pocket, and Musk is responsible for these games, that shouldn't even exist on first place? Sure, he should think and control his fingers and mouth better, but what the hell, you have president doing same stuff.So being sued over tweet, even if that tweet made someone stealing shares, err sorry selling them without owners knowledge, get burned, feels simply ridiculous for me. But I agree, I was raised and I Iive in different world, with different values and mentality, so I might look at all this from completely different perspective.

 

[DanoT]

I actually can't stand people like this (BS sellers), but in this particular case I really don't see anything wrong or bad from his side. Someone playing with someone else's money (if I understood right how shortselling goes) got burned and need to now pay from his own pocket, and Musk is responsible for these games, that shouldn't even exist on first place? Sure, he should think and control his fingers and mouth better, but what the hell, you have president doing same stuff.So being sued over tweet, even if that tweet made someone stealing shares, err sorry selling them without owners knowledge, get burned, feels simply ridiculous for me. But I agree, I was raised and I Iive in different world, with different values and mentality, so I might look at all this from completely different perspective.

"Selling Short" is a legitimate stock market play. I have never done it and don't really have any expertise in the play but basically instead of buying a stock with the expectation that it will increase in value, you sell a stock (which you don't own yet) in the expectation that it will go down. All you are doing is selling the stock stock before you have to buy it. It is a way of making money on a downward trending stock. There is a time frame (I am not sure how long) between when you sell the stock and when you have to then pay for it. The gamble is that the stock will have dropped in value during this time period. It is a risky (because stocks never rise or fall in a straight line) but legal stock market play.

What Musk did was use false information to manipulate the price of the stock upward something that is not legit with a publicly owned company. Short sellers exist because they feel the stock is over valued so the best way for Musk to ward off short sellers isn't to use false info but to do a better more efficient job of running Tesla.

I imagine the Telsa/Musk loyal fan boys will be up in arms over all of this but truth is, Musk did this to himself.

 

[dbostedo]

EDIT : Looks like DanoT and I were posting at the same time... this is in reference to Primoz post above...

Short-selling would not usually be characterized as "playing with someone else's money", and especially not "stealing shares" or "selling them without owners knowledge".

All it means is that you've made an agreement to sell the shares at a particular price, and you're betting to can buy them cheaper later.

For instance, I agree to sell you 10 shares of Tesla, when I don't own any shares of it. That means I'm now obligated to go buy 10 shares of Tesla to give to you (so I'm "short" 10 shares), and I'm hoping it falls in price, so that what I pay is less than what you paid me. You're betting that it goes up in price, so that you got a good deal, knowing that I don't have the shares yet.

It gets a bit more complicated if there are borrowing or loan arrangements or certain timing requirements... but it's simply speculating on the future price of the stock, just like any other stock transaction. There's nothing remotely illegal, underhanded, or sneaky about it.

 

[Primoz]

@DanoT and @dbostedo I guess I got it sort of right then what shortselling is. Maybe not completely right with "playing with someone else's money", but not far away. And definitely very close to gambling. So yeah you get burned sometimes when gambling, and blaming other's for you getting burned gambling is in best case ridiculous.
Just to be clear, I'm definitely not Musk's fanboy, as I wrote already, I honestly can't stand people selling BS like gold, so I'm anything else but his fanboy, but in this case I still don't see he did something bad, except his standard fast fingers without thinking twice and playing god who noone can touch him. But he's doing this from day 1 already.

 

[jack97]

And definitely very close to gambling. So yeah you get burned sometimes when gambling, and blaming other's for you getting burned gambling is in best case ridiculous.
.

Their are pros who short for a living. Its a calculated gamble but is hedge to one's favor. They usually do their homework in terms of security analysis and if the business is sustainable (that's the gamble). From there, they determine how much the stock will be worth.

One can argue the ability to short prevents a stock from being overvalued.

 

[DanoT]

So yeah you get burned sometimes when gambling, and blaming other's for you getting burned gambling is in best case ridiculous.

Gambling is legal as is investing in the stock market. Cheating as part of gambling (fixing a game etc.) is illegal and so is stock manipulation.

Musk putting out totally false info about Tesla in order to inflate the price of the stock is equivalent to fixing a game. Musk claimed that there was a private investor willing to pay significantly more for Tesla stock than the current stock valuation, so the stock market price went up but there was no private investor. Its called stock manipulation and Musk is fortunate to have been able to negotiate his penalty for his wrong doing.

 

[skibob]

The SEC has a mandate not to screw over the company, the market, or the shareholders. Guarantee you that he refused to settle and forced the SEC to sue so they would have to face the reality. 11% drop in one day. Now, do you REALLY want to ban me? He called their bluff.

He may be a loose cannon and an asshole, but this guy is crazy smart and filled with confidence.

I find the constant prognostications of Tesla's and Musks, demise to be comical. So:

PS: Stock at 304 this morning. IOW, its already recovered everything it lost and is headed up.

 

[François Pugh]

I find this thread fascinating.
For me and my car purchase, the economic incentive is not there yet to go electric, but I'm still fascinated.
History shows how hard it is for an upstart to go up against the established automakers, let alone go against established automakers AND big (ok and little too) oil.
Yet, there is one advantage this particular upstart holds. I am convinced that there are a lot of people who believe that if the electric car option is going to be in the cards, without waiting until the oil supply dries up, then they have to support this company. The other manufacturers now do offer hybrids, and e-vehicles, but would they if it weren't for competition from Tesla? I think not.

 

[DanoT]

I think Musk is all about pushing the technology. Tesla's real asset is the technology, so even if the company fails as a car builder, his technology will still be of value to future car builders who will likely lineup to buy the important pieces of Tesla technology, at no doubt reasonably bargain prices.

 

[skibob]

I find this thread fascinating.
For me and my car purchase, the economic incentive is not there yet to go electric, but I'm still fascinated.
History shows how hard it is for an upstart to go up against the established automakers, let alone go against established automakers AND big (ok and little too) oil.
Yet, there is one advantage this particular upstart holds. I am convinced that there are a lot of people who believe that if the electric car option is going to be in the cards, without waiting until the oil supply dries up, then they have to support this company. The other manufacturers now do offer hybrids, and e-vehicles, but would they if it weren't for competition from Tesla? I think not.

I think you are right about the economics. Its why we chose to pass on the Model 3 at least for now. But last year I bought a Chevy Volt. End of year deals plus federal, state, and local incentives drove the price well under $20k for me. And frankly, they can be made this cheap by the big well-capitalized automakers. Even after the incentives dry up.

I think for now that this format (electric, with a backup generator) is much more compelling between now and when there is a supercharger at every current gas station location. I don't ever, ever, have to think about the range of my Volt.

 

[LKLA]

On the back of this gentle slap on the wrist, Tesla’s legal risks still remain elevated given the plethora of now potentially bolstered shareholder class actions and the criminal investigation by the DOJ (the SEC is one thing, the DOJ yet another). In the time since Elon's August 7 tweets, Tesla has faced an increased number of shareholder lawsuits alleging harm on the part of investors (both long and short by the way). The SEC charges will likely strengthen those legal arguments and private lawsuits.

Tesla will surely be impacted by the decreased investor confidence and find it more difficult to complete a multi-billion dollar capital raise given the added uncertainty. It surely will not be paying prime + 10bps or issuing stock at market price.

No one that I know has been short Tesla based solely or even in part on the SEC case. This has been merely a side show. The short thesis is pretty compelling as explained by those who do this for a living. Musk is an amazing stock promoter but a horrible CEO. This settlement forces him to be only a CEO.