SEC Settles With Musk: Remains Tesla CEO, No Longer Chairman

SEP 29 2018 BY ERIC LOVEDAY 268

It seems all of the hoopla surrounding the lawsuit filed by the SEC against Musk can now be laid to rest.

The SEC has just reached an agreement with Tesla CEO Elon Musk. Good news is that he remains in charge of Tesla as its CEO, though there are a few downsides.

As CNBC Reports:

The Securities and Exchange Commission settled charges with Tesla CEO Elon Musk over his aborted bid to take the company private, with the billionaire remaining as the helm of the company, but relinquishing his chairman title and getting slapped with a hefty fine.

The SEC adds this comment:

“The SEC also today charged Tesla with failing to have required disclosure controls and procedures relating to Musk’s tweets, a charge that Tesla has agreed to settle.”

“The settlements, which are subject to court approval, will result in comprehensive corporate governance and other reforms at Tesla—including Musk’s removal as Chairman of the Tesla board—and the payment by Musk and Tesla of financial penalties.”

Aside from stepping down as chairman for a length of at least 3 years, some fines were imposed. Musk himself was hit with a $20 million fine and Tesla too gets fined $20 million.

Tesla will be required to appoint two new independent chairpersons, too.

The lawsuit should be officially close soon, as an out-of-court settlement was agreed upon and just some slight legal work remains, it would seem.

Now, let’s all listen to the advice of Musk here:

SEC Press Release below:

Elon Musk Settles SEC Fraud Charges; Tesla Charged With and Resolves Securities Law Charge

Settlement Requires Musk to Step Down as Tesla’s Chairman; Tesla to Appoint Additional Independent Directors; Tesla and

Musk Agree to Pay $40 million in Penalties

Washington D.C., Sept. 29, 2018 —

The Securities and Exchange Commission announced today that Elon Musk, CEO and Chairman of Silicon Valley-based Tesla, Inc., has agreed to settle the securities fraud charge brought by the SEC against him last week. The SEC also today charged Tesla with failing to have required disclosure controls and procedures relating to Musk’s tweets, a charge that Tesla has agreed to settle. The settlements, which are subject to court approval, will result in comprehensive corporate governance and other reforms at Tesla—including Musk’s removal as Chairman of the Tesla board—and the payment by Musk and Tesla of financial penalties.

According to the SEC’s complaint against him, Musk tweeted on August 7, 2018 that he could take Tesla private at $420 per share — a substantial premium to its trading price at the time — that funding for the transaction had been secured, and that the only remaining uncertainty was a shareholder vote. The SEC’s complaint alleged that, in truth, Musk knew that the potential transaction was uncertain and subject to numerous contingencies. Musk had not discussed specific deal terms, including price, with any potential financing partners, and his statements about the possible transaction lacked an adequate basis in fact. According to the SEC’s complaint, Musk’s misleading tweets caused Tesla’s stock price to jump by over six percent on August 7, and led to significant market disruption.

According to the SEC’s complaint against Tesla, despite notifying the market in 2013 that it intended to use Musk’s Twitter account as a means of announcing material information about Tesla and encouraging investors to review Musk’s tweets, Tesla had no disclosure controls or procedures in place to determine whether Musk’s tweets contained information required to be disclosed in Tesla’s SEC filings. Nor did it have sufficient processes in place to that Musk’s tweets were accurate or complete.

Musk and Tesla have agreed to settle the charges against them without admitting or denying the SEC’s allegations. Among other relief, the settlements require that:

Musk will step down as Tesla’s Chairman and be replaced by an independent Chairman. Musk will be ineligible to be re-elected Chairman for three years; Tesla will appoint a total of two new independent directors to its board; Tesla will establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk’s communications;
Musk and Tesla will each pay a separate $20 million penalty. The $40 million in penalties will be distributed to harmed investors under a court-approved process.

“The total package of remedies and relief announced today are specifically designed to address the misconduct at issue by strengthening Tesla’s corporate governance and oversight in order to protect investors,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division.

“As a result of the settlement, Elon Musk will no longer be Chairman of Tesla, Tesla’s board will adopt important reforms —including an obligation to oversee Musk’s communications with investors—and both will pay financial penalties,” added Steven Peikin, Co-Director of the SEC’s Enforcement Division. “The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders.”

The SEC’s investigation was conducted by Walker Newell, Brent Smyth, and Barrett Atwood and supervised by Steven Buchholz, Erin Schneider, and Jina Choi in the San Francisco Regional Office and Cheryl Crumpton in the SEC’s Home Office.

Source: CNBC

Categories: Tesla

Tags: , , ,

Leave a Reply

268 Comments on "SEC Settles With Musk: Remains Tesla CEO, No Longer Chairman"

newest oldest most voted
Miggy

Good news, now get on with building cars.

Get Real

Which they are doing very well now as the EV scorecard amply illustrates.

Bottom line is he is still running Tesla and Tesla will remain the dominant manufacturer of compelling EVs going forward.

Will

Agree

Change
Start with this fact. Jay Clayton was appointed in January 2017 by Donal Trump to head SEC. Everybody knows Trump is doing the bidding of the fossil fuel lobbyists. So Jay Clayton is ordering this hit on Musk/Tesla to please the fossil fuel interests. I am really worried now. The fossil fuel interests will not stop until they succeed in bankrupting Tesla. SEC/Jay Clayton will now work to get their man to chair Tesla’s board so they get a chance to sabotage everything Musk does and eventually remove Musk as CEO. It will be enormously important that the new chairman is not a fossil fuel guy dictated by SEC/Jay Clayton/Trump. That will be the end of Tesla. This is currently a big win for the fossil fuel interest and the shorters they use to profit on this on top of their ambition to destroy companies that make sustainable products that are killing the fossil fuel based industries. We need to fight back much more vigorously. One thing could be Tesla shareholders suing the SEC for trying to destroy Tesla by making baseless lawsuits against its CEO and chairman that are politically motivated serving fossil fuel interests. This is what this… Read more »
Tim Miser

Everything is a conspiracy isn’’t it.

Change

The SEC case against Musk/Tesla is 100% political and 0% about investment fraud. There is no conspiracy here just a fight between two industry clusters fighting for their economic survival. One industry cluster that make sustainable products like Tesla and the other cluster that make non-sustainable fossil fuel based products.

We need to see this for what it is: Jay Clayton is abusing his powers over SEC to pursue political interests from the fossil fuel industry. He needs to be scrutinised from now on so we can find some hard evidence that can bring him behind bars where he clearly belongs. Anyone working at SEC or elsewhere who got incriminating evince on Jay Clayton should report this to relevant authorities or perhaps even to Tesla so their lawyers can judge how to proceed.

The fossil fuel interest are using dirty tactics because they know they cannot win a fair fight over Tesla that is going to crush them if the game is just about making the best and most economical products.

ziv

Musk handed the SEC the rope to hang him with. And the SEC decided to slap his wrist, instead. If there was a conspiracy, Musk wouldn’t be CEO any longer.

Change

SEC wanted to remove Musk as CEO and Chair. You call that a slap on the wrist? SEC/Jay Clayton/Trump is waging nuclear war on Tesla in order to bring it down and they may succeed because it is not over. It never is. SEC are supposed to protect the shareholders interest but this is costing Tesla shareholders billions of USD. It is a perverse abuse of SEC powers and Tesla will not be the only one. Amazon and Facebook are likely next target firms for some made up charges by SEC because Trump dislike Bezos and Zuckerberg. Jay Clayton/Trump needs to be stopped before they do more damage to the US.

Ziv

LOL! This agreement is slightly tougher on Musk/Tesla than the original proposal from the SEC. The SEC is supposed to protect all shareholders of all corporations that do business in the US. Musk made a large mistake and the SEC could have stomped on him much harder than they did. He is out $20Mn, Tesla is out $20Mn and he loses his Chair on the Board, but remains as CEO. This is trivial.

Change

The only interests the SEC are protecting in this case are Tesla’s shorters and their fossil fuel financiers who want to bring Tesla down. Everybody else have lost big time. The real criminals are SEC/Jay Clayton/Trump. It is very sad that fossil fuel interests now control both the SEC and EPA. That will make them far more effective in their fight to bring Tesla down at least in the US. Tesla could move most of their business abroad. I am sure China would welcome more Tesla business. However, better to topple Trump and get Jay Clayton out of SEC so that this agency can start to do what it is supposed to do instead of destroying shareholder value as they currently are doing.

Mister G

I don’t think so musk the board has to add 2 more independent members, I can see them being fossil fuel mafia members and push for ousting musk and adding ICE option to tesla vehicles

Prad Bitt

The only mistake is underestimating the media gossip power. The funding was secured. It.s the media who played the offended virgin and constructed a scandal with it. Taking Tesla private was the right move to make to protect it from the media smear campaign (initiated by the Big Oil P.R. companies) and the market responded accordingly.
The only casualties were the short sellers, and unfortunately they are sleeping with most of the economic corporate mainstream media.

AnonyMouse

@Change

Oy vey! 🤦🏻‍♂️

Do you have any other 🦇💩crazy conspiracy theories that you’d like to share with us? 🙄

Prad Bitt
“Conspiracy Theory” is an expression invented by the propaganda wizards to hide the ones that use them most : governments and large companies. Actually, the spreading of the negative aura of this expression IS a conspiracy by itself. Just think about it for a minute. Life is full of conspiracies, the spider setting his web, the tiger hunting to feed his young, the football teams conspire all the time to win. Each day, works councils, board of directors, diplomats, senators etc. routinely conspire against each other to survive, to gain /keep power, to make more profits… Competition IS a conspiracy. There is omnipresent fierce conspiracy, among companies, among brothers and sisters. Did you ever put the blame on your little brother for the missing cookies that you ate? If you did you are a dirty conspirationnist! Nature itself is a mega “conspiration” party! Plants and animals use all kinds of cunning and deceptions to survive. History of mankind is full of conspirations, all the time. How come when one of the innumerable conspiration is brought to light, there is an immediate auto-censorship taboo response as if scams, cheating and shady deals were impossible in our democratic capitalist society?!? The big… Read more »
Independent Observer

Rules and Laws apply to all publicly traded companies. Then Enron scandal was prosecuted by Bush appointed officials who were very friendly fossil fuel and were pro-deregulation. You can’t mislead investors. Elon made an error by trying to punish short sellers and in the end punished the his financial supporters. To me, there should be laws against short selling, but there aren’t. Elon needs to adjust the game plan to the rules as they are not the rules he wishes were in place.

TeslaInvestors

Bloomberg tracker is very close to breaking into the 1000-2000 cars a week range 🙁 Pictures on twitter showing empty parking lots and empty car carriers at Fremotn factory. Wasn’t there a false twit about some car carrier shortage?
I think SEC is going to seriously clip Elon’s wings in posting all sorts of untruths o twitter. Elon is so addicted to it, he will be likea fish out of water. He will have to get a permission for everything he tweets now 🙂

BTW, The SEC press release is titled “Elon Musk Settles SEC Fraud Charges; Tesla Charged With and Resolves Securities Law Charge”. But the IEV title reads ‘SEC settles with Musk”. A one day delay cost Elon one more year of chairmanship.

Get Real

Did you cut and paste these conspiracy theories from Reeking Alpha?

Doggydogworld

Bloomberg’s weekly production number is useless. Ignore it and become smarter.

Their cumulative production number is ok, though it went off the rails this quarter and had to be “adjusted”.

antrik

Well, the tracker was useful to get a rough idea of the ramp in the “early days”; but now that a somewhat steady state has been achieved, it’s more noise than data…

Change

Indeed it is useless. Bloomeberg keep changing the historical data so that development over time always fit a narrative of Tesla producing less and less cars when in fact they make more and more.

Again it is shorters and fossil fuel interests that are paying for much of the story telling at Bloomberg and other media. Part of mainstream media is extremely corrupt and manipulative. SEC should investigate but with Jay Clayton as head of SEC that is never gonna happen. He is in the pocket of the fossil fuel lobbyists. He got that position by Trump so he can use SEC to wage war on everybody Trump dislike or whom Trump owe a favor like the fossil fuel industries who fund him. Do not be surprised to see SEC next attack Amazon because Bezos is opposed to Trump and Facebook as well.

AnonyMouse

@Change

Cuckcoo! Cuckcoo! Cuckcoo!

Doggydogworld

Bloomberg adjusts the numbers toward the end of each quarter so they won’t be too far off the official numbers Tesla announces in their production update.

They were WAY above guidance and observed production this quarter so they are bringing their numbers down.

That’s all

Change

If you have been following their graph in detail like I have you will note that Bloomberg keep changing the numbers they have already reported so that it looks as if Tesla always produce less in each new months when in fact Tesla produce more. Only factual reporting by Bloomberg is when Tesla publish their quarterly production data. Then Bloomberg adjust to fit these data and claim they predicted it perfectly even though it is complete BS.

No wonder that the general public is hating mainstream media more every year. Their hypocrisy about being the pillars of truth and free speech while taking bribes to publish anything for the highest bidder no matter how distorted is hilarious.

Pushmi-Pullyu

I think the problem there is trying to equate Bloomberg with “pillars of truth and free speech”.

There are only a few news publications and news organizations which qualify for that. Bloomberg certainly ain’t one of ’em!

ChibiTesla

not just in pictures.. but it was empty for real.. I was at the Fremont delivery center all day today with >20 other owners/volunteers.. few blocks from the delivery center, last week, was FULL with cars.. today, they were all mostly gone.. you can see Carriers leaving Fremont non-stop all day.. even more delivery today than last week.

Pushmi-Pullyu

“…a false twit…”

Well yes you are, but you need not be so blunt about it.

ziv

I have read that he was out as CEO, I wonder which account is accurate. I have to admit that I think Tesla is stronger without Musk going forward, so I wouldn’t lose any sleep if he was turfed. But it would seem to be a pretty harsh punishment.

Steven Loveday

No. He is still CEO. He just can’t be chairman of the board for the next three years.

ziv

Thanks, Steven! The first account I read on Marketwatch had an erroneous statement that he was out as CEO and I parroted that statement. My apologies for spreading faulty info!

Steven Loveday

No worries.

pjwood1

Right. The board heads the shareholders. Largest shareholder is Elon, followed by financial institutions. I look at the settlement as a non-event to the shares, if not a positive as new board members will arrive. Elon isn’t even leaving the board, just its chair position.

R.S

Yea, I think it is actually better for Tesla this way. Musk is great most of the time, but sometimes he acts like a moron.

If the board now grows a backbone and actually acts against his worst impulses, then Tesla might be seen for their accomplishments, rather than if Elon is normal, or weird this week.

All recent downturns in stock price were his fault, not Tesla’s actual performance. And every time he doesn’t tweet dumb stuff for a week, or smokes marijuana on camera, the stock goes up. So if they can make him act like a CEO in public constantly, the stock could go up a lot.

Pushmi-Pullyu

If this will at least result in someone at Tesla censoring Elon’s tweets, then I think that’s a good outcome, despite the $20 million + $20 million fines. Even better if Elon, while remaining CEO, is forced to delegate some authority to other executives… and it looks like Tesla’s Board already took steps in that direction, days before the SEC lawsuit.

But I rather doubt most investors will see the SEC’s suit as good news.

Lee Ramer

If Elon is out as CEO or unable ti have input Tesla will fail. If that is what you want then say goodbye to planet earth.
We are already pretty f*cked as it is so to give the Fossil fuel industry a reason to can EV’s and other renewables will be our final nail in the coffin.

Nozuka

Even if Tesla were to fail, EVs can not be stopped anymore. China is making sure of that.

Ricardo

No worries, you can always head to Mars

Pushmi-Pullyu

Tesla Motors was started before Elon joined, and it will continue when he leaves.

MDEV

Sure shorter, the same as Apple is better without Steve Jobs.

Jopp

Thats not a bad deal.
What will happen with the damages he caused private short and long investors? These losses might be billions?

Steven Loveday

The $40 million will be used to pay damages.

pjwood1

The SEC caused more damage, than Musk. They moved the stock down 1.27 billion, helping the shorts.
https://www.foxbusiness.com/markets/tesla-short-sellers-score-after-sec-sues-elon-musk

Steven Loveday

Exactly!

mzs112000

I almost wish they had been able to take Tesla private, no more short sellers, and they would be almost out of the SEC’s reach…

Terawatt

Why do you care about the short-sellers? It has no bearing on the business whether people bet the stock will go up or down in the short term.

arne-nl

Problem is not the shorting, it’s the FUD that’s being spread by them to make their bet pay off.

They’d happily destroy one of the most promising companies just for the sake of profit.

Lou Grinzo

Serious questions:

1. How many more cars would Tesla be selling in the absence of all short seller/hater FUD? I’d guess not many more, if any.

2. How many people buying a car even know about the SSs/haters, and of those who do know, how many care? I think it’s highly likely that the FUD actually helps Tesla by making them look even more like a bunch of disrupting rebels that The Man doesn’t want to see succeed.

To date, I’ve paid zero attention to the FUDsters; the only reason I know about that phenomenon at all is comments on this site. They’re noise; ignore them and focus on being an EV ambassador.

Pushmi-Pullyu

It’s pretty naive to think that fake news has no effect on public perception. Why do you think there is such an uproar about Russians using fake Facebook and Twitter accounts to conduct information warfare against the USA?

Fake news about Tesla’s cars has created the false impression that they are more prone to fire hazard than gasmobiles, when the reality is they are considerably more safe.

Fake news has also pushed the false narrative that Autopilot is dangerous, when in reality use of Autopilot + AutoSteer significantly reduces the frequency of serious accidents.

“How many more cars would Tesla be selling in the absence of all short seller/hater FÜD?”

Well I guess we’ll never know, now will we? The primary target of anti-Tesla FÜD is investors. The primary place Tesla gets the funding it needs for building out more production capacity rapidly, is investors.

Serious question: Do you really think all that FÜD doesn’t reduce the amount of money that Tesla can get to grow the company?

antrik

Actually, the lawsuit moved down the stock by more than $6 billion… the 1.27 billion figure is just what short sellers gained. (Some 20% or so of stock is shorted.)

Of course they only take home the gain if they covered at that point… If they are holding on to their short position, most of the gain will likely evaporate on Monday.

Madan R

What will happens to the shorts when the stocks rise on Monday/Tuesday.

William

There are some shorts that don’t play the incidental daily and weekly gyrations, as they are playing the long game, and hope in 2020-2021 “ish”, that they can profit when Tesla stock is potentially trading at approximately under $200. per share.

These shorts may be sadly mistaken by Tesla future stock valuation performance.

Terawatt

Yes, of course they caused more damage to Tesla’s investors. But the SEC is there to protect the integrity of the ENTIRE marketplace, really to protect the interests of society — and there are clearly many instances in which the short term interests of investors in one specific stock clashes with the interests of society. You can’t have CEOs or other high-placed insiders running around irresponsibly tweeting (or otherwise spreading) half-truths and untruths as they might like.

As for helping the shorts, the SEC obviously doesn’t need to be concerned about anyone being helped (since that is a good thing). Your imagining shorts as evil geniuses and longs as the pillars civilized society is utterly baseless and irrational. There is ZERO meaningful moral difference between betting that a stock will decline and betting that it will climb. What we should be concerned about is attempts at manipulation — whether trying to pump things up or drag them down.

Jopp

Ah now its the fault of the police, that the public image of the criminal is bad after he got convicted…. Clearly the losses of recent days are Musks fault, but as the cause was not designed to influence stock value, nobody is to blame.

antrik

Neither were his original tweets designed to influence stock value…

Mister G

That’s the plan fossil fuel mafia and wall street mafia are conspiring against TESLA CONNECT THE DOTS ON CLEAN AIR WAKE UP EARTHLINGS CO2.EARTH

esto perpetua

I wouldn’t be surprised if Elon announced (tweeted?) that he will cover Tesla’s fine.

antrik

Not sure whether there is a legal way to do that?…

Terawatt

Strange if not. Giving gifts is for the most part still legal in the land of the free (aka Trumpistan).

AnonyMouse

Yeah it’s still legal in the US, but giving a gift that large Musk would have to pay a very hefty Federal gift tax & California state gift tax. After the tax-free threshold is passed, gift taxes kick in.

The reason for the gift tax is to prevent wealthy individuals from evading the estate tax at death by simply giving away their wealth on their death bed or anytime while alive to the same people who would be the beneficiaries of their will. The remaining tax-free threshold after deducting gifts made during the taxpayers lifetime (intervivos gifts) is then used at death to determine if any estate tax is due at death.

Pushmi-Pullyu

Tax on a $20 million gift, when Elon is a billionaire? He would take it out of petty cash… or rather, he’d direct one of his assistants to do that.

Doggydogworld

I read Musk will buy $20m of Tesla stock. If he truly wanted to give $20 million he could buy options with a $1000/share strike price or something similar.

zzzzzzzzzz

$40 millions is for SEC and is a good deal.

Civil class action lawsuits by investors who bought or covered after infamous 4:20 tweet at extra high price for billions of losses is another story. That will be easy to win for plaintiffs now after SEC settlement.

DOJ criminal investigation is yet another story that likely will not go anywhere any time soon, but legal possibility exists.

Neither helps ability to raise capital.

antrik

The settlement explicitly states that Musk doesn’t admit (nor deny) the charges. It won’t do anything for the investor lawsuits.

(Also, the press release explicitly states that the $40 million will be distributed to “harmed investors”.)

Seven Electrics

Private lawsuits can still proceed.

Get Real

How much are you filing for 7 pretend Tesla’s?

Seven Electrics

I’ve never held a position in Tesla’s stock, though I have supported them by purchasing their cars. I have plenty of skin in the game, which is why it’s so difficult to watch the Tesla train wreck.

Get Real

You are not fooling anyone here.

You are such a liar which is obvious based on your obviously false claim of owning Tesla’s or “support” since you constantly bash the cars, the company, and Musk here on InsideEvs including in this very thread in multiple postings by you.

pjwood1

I don’t reject Seven Electrics once owned a Tesla(s). Long history of posts. It’s possible it didn’t suit. No idea about other motives.

Get Real

I think his motives are pretty clear after a thousand negative posts against the cars, company and Musk.

Terawatt

You don’t know his motives any more than I know yours. Would you be impressed if I started writing confidently, as if I knew, about WHY you support the company? Say I convince myself it’s all down to narrow self-interest and therefore you simply MUST be a shareholder. If I read what you write in that light I’ll see nothing but confirmation of my theory, and soon enough I’ll feel sure that I know much more about you than I really do.

Give people the benefit of the doubt. Not everyone thinks the best way to help a good cause is to not be critical.

Get Real

You must be naive.

Would you buy a car from Tesla and then write hundreds of negative posts about it here and….then buy a 2nd car from Tesla and proceed to slam it online here too?

Because that is exactly what 7 pretend claims to have done and his post history is on display.

Pushmi-Pullyu

Eleventy Pretend Electrics has constantly posted anti-Tesla FÜD and smear campaigns for years, both before and after claiming to have bought first a Tesla Model X and then a Model 3.

If he really has chosen not once but twice to buy Tesla cars, then clearly he doesn’t honestly believe the falsehoods he posts about them.

More likely, it’s all just a pack of lies.

John

Jesus H, when are you gonna drop the ruse that you own any Tesla(s)??

CDAVIS

@Seven Electrics said” “I’ve never held a position in Tesla’s stock…”
——————-

I’m guessing @Seven Electrics is cleverly aware that shorting TSLA does not require “held [holding] a position in Tesla stock” unless @Seven Electrics also has/had a TSLA hedge position where that hedge position somehow included TSLA shares holding.

Also @Seven Electrics could be directly or indirectly invested in a hedge fund that has shorted TSLA in which case it’s the hedge fund and not @Seven Electrics shorting TSLA.

In either case @Seven Electrics smells of Jimmy Cheese.

Pushmi-Pullyu

He’ll use his imaginary friend who’s a lawyer to file two imaginary lawsuits for his two imaginary Tesla cars. 😉

(He doesn’t imagine that his other pretend cars are Teslae, as I recall.)

TeslaPlease

Can the SEC proceed with any criminal charges against Mr. Musk or Tesla or does this close that avenue of justice?

John

Sorry man, looks like your just gonna have to go on with your life now.

Doggydogworld

SEC does civil, DOJ does criminal. This SEC settlement does not preclude criminal charges. However, the SEC and DOJ share information, and there’s no way IMHO the SEC would have settled and allowed Musk to remain CEO if the evidence showed criminal fraud.

REXisKing

How do you get criminal charges for “AM CONSIDERING”.

Spider-Dan

It wouldn’t be for “am considering”; it would be for “funding secured.”

zzzzzzzzzz

Elizabeth Holmes has settled with SEC for 0.5 million, though she was removed from control. Criminal charges followed later.

It is up to DOJ prosecutorial discretion to follow up with charges some time later or not.

Ricardo

Wasn’t she going to save mankind or something?

Nix

You’ve successfully found the exception that proves the rule. Finding the rare exception just shows how rare it is and how unlikely it is to happen.

Terawatt

It’s actually hilarious that a simple statement that is obviously objectively true — and relevant, fair, and an answer to the question you replied to — gets downvoted like crazy. I guess some people don’t CARE what’s true, only what they want to hear.

bjrosen

Will depend on the actual damages the plaintiffs suffered, you are right this could in theory cost him billions.

Prad Bitt

And what of the damages the SEC caused to investors friday?

Doggydogworld

Musk caused that damage.

Marshall

No, the SEC caused that damage!

MTN Ranger

That’s like blaming the Police for your missing work because you’re in jail with a DUI.

yo

SO the police are shorters and this is a conspiracy to help their union funds I knew it!!

Pushmi-Pullyu

Despite a lot of conspiracy theory comments in posts above, the SEC was doing the job for which it was created. Elon tweeting “funding secured” was a false material statement which a reasonable person may have used as the basis of a stock buying or selling decision… and many did.

The SEC did the right thing here, in response to Elon doing something which clearly was wrong. If anything, the SEC let him off lightly in allowing him to retain his CEO position, and allowing him to retain a seat (altho not the Chairmanship) on Tesla’s Board of Directors.

arne-nl

I agree, mostly self-inflicted wounds. I am astounded that he would make such a rookie mistake. I hope he learned from it.

Will

That was Musk. That’s why he settle.

Brian

On paper

Seven Electrics

Elon takes a slightly worse settlement than the one he rejected less than 48 hours prior. That’s a smartish move, right there.

Must appoint two more “independent” directors to Tesla’s board, though Tesla’s current “independents” are actually Musk cronies, so the board will likely remain a rubber-stamp lapdog.

Sadly, while Musk is out as Chairman, he remains as CEO, so Tesla’s troubles remain. Thankfully for this season’s ratings, he retains his Twitter account. While this season seems to have jumped the shark in terms of unrealistic, over the top plot twists, I still can’t wait for the ending cliffhanger. What will they think of next?

Get Real

You mean the “troubles “ they have lapping the field in both accelerating numbers of manufacturing and easily selling compelling EVs as the EV scorecard attests?

Seven Electrics

No, I mean the losses, the debt, and the dubious quality of manufacturing. Tesla’s business model is selling a dollar for 80 cents. You can top a lot of sales charts with that approach.

pjwood1

Hand over fist profits, at 60k ASP. Gain more market share, build more margin. Spending it developing the next car is what you call “losses”. I call it “business”. BMW, Mercedes, Ford call it “regulation”, or “Trump Tariffs”, or anything else hiding what’s really going on with their business “losses”.

Big Solar

theres more to it than that but i think you already know this “seven electrics”

Counterpoint

Losses and debt are not car problems. They are results of investing profits (and then some) into more extensive charging networks, new vehicle lines, etc. Poor fit and finish is a car problem, but they appear to be working on it

Doggydogworld

Investments into assembly lines and superchargers do not directly cause losses. If Tesla cut capital expense to zero one quarter their profit/loss would not change.

Terawatt

If that’s their model you should have bought more than seven. 😁

TeslaPlease

Or do you mean Tesla asking customers for payment in full before delivering cars to customers because they are so desperate for cash?

marshall

Well at least they haven’t run to the US government for a bailout. GM and Chrysler can’t say that!

Get Real

What a clown, they just delivered 50,000 Model 3s and a goodly number of S and X cars with an ASP of well over $60,000 apiece that yes their happy customers gladly paid for.

Go back to Reeking Alpha or Brietbart and stay there.

Terawatt

You’re not addressing his point at all. I think his build quality point seems highly dubious, but nobody can seriously claim Tesla is already a financial success. The thing reasonable people can disagree about is whether or not they ought to. There’s a plausible argument to be made for prioritizing growth over profitb in the short term, and it might well be the ONLY way to disrupt the car industry. But nowhere can I find Tesla making the argument.

Roy_H

You apparently don’t understand how financing works. From any manufacturer’s point of view they always get paid price agreed to. Finance institutions provide payment plans and leases and they in turn pay the manufacturer the full value.

Rebel44

Hey Mods, can you please remove this jerk for the lack of constructive posts?

I don’t see a point in letting trolls intentionally provoke people here.

thx

Will

You mean Real right

Pushmi-Pullyu

Hear, hear! What a waste of bandwidth, and time.

Seven Electrics

It looks like I’m wrong about the season finale:

“Tesla will establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk’s communications.”

Robert Weekley

Isn’t that your new job there, finally in official blocking capacity? “No Elon, you can’t send out that tweet!”

Will

Yes, they should oversee Musk communications

Will

Real you know his board are Cronies. Don’t be lying and be Real. If he had a good board they would have hired a right hand man to help him and took away his Twitter for a time that they seem appropriate to go back

Robert Weekley

“What will they think of next?” Hiring you as one of those Independent Directors, to “Educate” them on how to run Tesla, Inc.?
😱😌😳😂

Will

Ok, it’s admitting guilt but now let’s move on. Now get a profit for Q3

ziv

Exactly. I am a Tesla fan, I want Tesla to succeed. If Musk gets in the way, I want him out. He was exactly what Tesla needed and I was glad he eased Eberhard out, but his contributions have been outweighed by his inane behavior of late.

groingo

This voting thing is messed up, when I gave you thubs up it gave an equal thumbs down, I guess this is one way to get Elon the mental help he needs.

Rolando

The webpage for vote count is only updated when you click on up or down vote.
So if someone else clicked down you will get 1-up and 1-down counter update. If another person votes also up then you get 2 ups displayed after your click ……

Big Solar

this post is hot, people voting a lot and i think your own personal page refreshes as you vote.

antrik

Musk is not flawless, but his very real contributions still far outweigh the silly media blunders.

TeslaPlease

He does not have to admit guilt but he cannot claim innocence (part of the agreement). What an embarrassing and shameful scandal that could have been prevented.

John

Yep. And now that it’s settled, we can all go on with life. Congrats to all of us.

Lee Ramer

He didn’t admit anything which is probably why he rejected the first one. He would rather pay more for a fine and keep his integrity intact. I agree with him. Screw the trolls and the shorters and all the human race haters who want Tesla to die.

Will

Agreeing is admitting. You never been to court then or got sue.

antrik

Read the settlement. It *explicitly* says there is no admission of guilt.

antrik

The terms of the original settlement seem to have been identical…

It does make me wonder though whether he originally rejected the settlement, so he could say the charges are unjustified before settling, since he is not allowed to say so *after* the settlement… (Admittedly, that’s a pretty crazy theory 🙂 )

Speculawyer

No, it’s not admitting guilt.

Pushmi-Pullyu

So, if I read this right: After initially refusing the SEC’s settlement offer, Elon reconsidered and took it without the SEC sweetening the deal.

At least, I don’t see anything in the settlement terms describe in this article which are different from what was described in comments over the past few days.

Anyway, I personally am glad it’s settled, and if this means there will be some “filters” put in place on Elon’s tweets, then IMHO that’s a positive change for Tesla.

Seven Electrics

The deal actually worsened, slightly: in the original proposed settlement, Elon was banned from being Chairman for two years. In the new settlement, the ban increases to three years.

Robert Weekley

It looks like, the more you stall, the more you lose, then!

antrik

I doubt there was an actual change just in this particular detail. It was probably just misreported originally — after all, these reports where never official; and the first ones didn’t even mention this part at all…

Doggydogworld

I’m confident the deal got slightly worse. SEC must do that to remain credible in future negotiations.

Ron M

I thought previously he was banned from being Chairman for two years now it looks like three years. Still not a big deal.

Pushmi-Pullyu

Thanks for the clarification. Given his commenting history, there was no rational reason to believe “Seven (pretend) Electrics” when he said that.

Doggydogworld

-It’s 3 years not being chairman vs. 2.
-Controls on tweeting are new (and much needed!)
-Monetary penalties might be different, but probably not

esto perpetua

It was 10mil on thursday, it is 20 mil now plus another 20 mil for Tesla.

antrik

Is there any reliable source for the original terms? As far as I can tell, they just came through the grapevine, and there was some confusion about the details. (Initial reports didn’t even mention the chairman ban at all.)

Also, I have a hard time believing they actually changed the terms and finalised the deal a day later…

Doggydogworld

Original terms were not officially released, but independent reports from WSJ, NYT/CNBC, etc. agreed. David Faber of CNBC was very firm that the info was accurate.

SEC has to harshen the terms after a defendant rejects a deal, otherwise they lose credibility in the future. It’s basic game theory.

Pushmi-Pullyu

CNBC isn’t a credible source when it comes to Tesla-related news — they sometimes run outright FÜD — but I’ll accept that the other sources mostly are. (Some of the WSJ’s “news” about Tesla is false, too, but I think they are reasonable credible on straightforward facts like this.)

Rolando

The original offer (unofficial rumors of insiders) was 2 years chairmanship pause and $5-10 private fine and “much smaller” fine for Tesla. Now its 3 years ban, and 2x $20 million fine.

The worst thing is that rejecting the first SEC proposal (confidential back-room negotiation), made this whole internal Tesla communication public, according to comments of legal experts in the media. The SEC case filing document (23 page PDF posted Yesterday here in InsideEVs) is a “treasure trove” for lawyers in the class action suit of short and long investors who got burned, as now they have access to all the internal Tesla communication they didn’t had before.

antrik

I don’t see how the filing would help them substantially. The document contains allegations, not evidence; any actual evidence other investigators get access to should be unaffected…

Tesla4theWin

Soneone mentioned in another post that the original settlement would imply guilt which Musk refused.. so the “worse’ deal with no guilt is worth the extra fines, independent directors, additional year off the board and oversight of his communications.

Doggydogworld

Best available info says the original deal was also “neither admit not deny”. That’s standard for pre-trial deals.

antrik

AIUI the original deal was the same in this regard… Doesn’t admit nor deny guilt.

ffbj

A wrist slap after all. I was surprised that they were talking about taking it to court, but then they get to see all the cards, the SEC has laid on the table this way.

John

Not sure about you, but from where I come from, $40 million is a lot of money. Especially for a company that needs every dime right now. That’s 600+ Model 3’s bro. Not exactly chump change.

antrik

$20 million… The other 20 is from Musk, not Tesla.

Of course it’s not exactly pocket change either way… But not a serious problem in the larger picture I’d say.

Terawatt

Why were you surprised they considered taking it to court? I assume “they” refers to Tesla (actually, Musk and his lawyers) here..? But you’ve told us repeatedly they had absolutely nothing, couldn’t prove intent to hurt the shorts, and then it didn’t matter that it was lies? Or have I misunderstood your previous position?

ffbj

Yes, I figured they would settle. Mostly you got what I was saying. I did not think it would go to court, and saw no sense in not taking the deal. Also I said it one post, not repeatedly nor did it say they had no case, just not a very strong one.

Ron M

There’s 36 manufacturer’s that sell vehicles in the US by this time next year Tesla will be at least the number 18 seller of vehicle’s in the US.
So Tesla is definitely a mass market producer.

http://www.usdebtclock.org/auto-sales.html

Terawatt

Yes, but also a very different one. Still growing so fast and still unproven that they can make a decent profit while also developing future vehicles. Development never ends, but it perhaps has to slow for a company to be profitable.

antrik

Actually, they need to turn up development… However, with significantly higher volumes, there is a much better chance they can take the expenses out of ongoing revenue, rather than needing additional debt.

Madan R

Thanks for sharing this link. Tesla started the year with much lower sales and slowly progressed over the months. Should be able to move few more ranks in the next 4 months.

Loverboy

One more hurdle Next up doj.

pjwood1

Since when does DOJ jump in, if they don’t do it with the SEC?

dam

Elizabeth Holmes only got $500k fine from SEC, but DOJ….

Doggydogworld

SEC and DOJ cooperate and share info. No way IMHO SEC would allow him to remain CEO if they had evidence of criminal fraud.

Of course the probe may continue and eventually find new evidence.

Speculawyer

LOL…short clowns trying to extend this story. Nope. This is done.

ziv

I think there will be a kerfuffle at the open of the stock exchange tomorrow, Tesla will drop further, maybe to 240 or so, recover a bit later in the day and then there will be a tempest in a teapot at the close as the “experts” forecast the demise of Tesla in the months to come. And then over the next week or two Tesla will gain back 90% of its lost value.

ffbj

It may even go higher than before this whole mess came out, as shorts cover, and the news of final flurry of activity penetrates the blogosphere.

Doggydogworld

TSLA will open way up Monday AM. If I had to guess I’d say ~300. The terms are terrific for shareholders – Musk remains as leader but with a less subservient board and a procedure to curb his bouts of Twitiocy.

Musk was going to lose at trial, and it was starting to look like he was determined to take the company down with him. That was terrifying to fund managers. Remember, they report their quarterly holdings as of last Friday’s close. It was a risky career move for that report to show TSLA the next 3 months

Investors can focus more on the business now, which is growing like crazy. Tesla also has a much better chance of raising capital for future growth.

antrik

The last shareholder vote certainly didn’t seem to indicate that anything close to a majority of shareholders actually wants a “less subservient” board…

Doggydogworld

Those ballot initiatives never get traction. Passive funds and retail pretty much just vote the straight management ticket.

The only way to get votes is to spend millions on a proxy battle, sending out different-colored pre-filled ballots and even calling shareholders (e.g. “remember to mail in the orange ballot for higher dividends”).

ffbj

Good call, at $303, recovering nearly all it lost last week.

Speculawyer

Go ahead. Vote me down. You’ll just be proven wrong again. It’s all these bad-faith bashers that are what drove Elon over the edge but he needs to be more disciplined.

groingo

The 40 million dollar Tweet, everyone was telling him to stay of Twitter but he wouldn’t listen, stupid is as stupid does.

pjwood1

Tesla is showing up next to Judge Kavanaugh right now, without paying a nickel. What are you calling stupid, that they should pay up for the brand recognition? Who knows, maybe settling was a bad idea, and they just gave up more than 40mn in free advertising? It’s not like the SEC causing even more damage plays poorly.

Doggydogworld

They say there’s no such thing as bad publicity, but “CEO Settles Fraud Charges” might be an exception.

antrik

Which is probably why he was so reluctant about the settlement…

antrik

I’m sure you never ever succumb to the temptation of saying something rash…

ziv

Most of us aren’t running a multi-million dollar corporation that is doing the near impossible, breaking into the top levels of automakers. And doing so with a game changing technology. Great times call for great judgement. Did I still most of that line from a comic book?

Pushmi-Pullyu

“Steal” most of that line, perhaps; but “still”… no.

Mister G

The fossil fuel mafia is not going to be happy with this, they want tesla to be destroyed ASAP

Robert Weekley

As the Model Y ramps up next, expect even more pressure, distractions, FUD, Lies, etc, to fly! I am wondering if Model Y reservations will reach a peak of 1 Million or more?

William

Probably under a Million, but that’s not counting my reservation.

Will

Let’s get through Model 3 reservations before the midel Y reveal

antrik

That’s very unlikely. Model Y reveal is supposed to happen early next year…

ziv

Can’t happen too soon in my book.

Will

Nope, 2020. That way they can finish up the model 3 ramp up. If they did it in 2019 then people will change their reservation to the Y cannibalizing the model 3 sales

jamcl3

I bet there will also be a very quiet Model 3 redesign to fix invisible things “under the hood” to improve margins, manufacturing efficiencies and reliability. Tesla admitted they were rushed on M3. This might slow down the Model Y development slightly, as they are trying to self-fund development going forward.

antrik

Well, they are rolling out small changes under the hood all the time… But significantly increasing manufacturing efficiency would likely require major redesigns. And if it requires expensive retooling at Tesla or suppliers, it’s probably not worthwhile…

antrik

I don’t think they are worried about some people changing Model 3 reservations to Model Y ones…

Either way, reveal in early 2019 is what Elon said.

REXisKing

Yes, when is the SEC going to look at Jim Chanos, UBS, and the media pay-to-play Fraud ring?

EVFan

True, Imagine when I see 10 ads from Mercedus or BMW in a single day in CNBC why they will have some good info about Tesla, only they will highlight some petty small things into as some fundamentals issue about Tesla. Very cheap behavior.

EVFan

No need to reserve anyhow for long range Y they will open up immediately when they start building cars in good numbers. But I will book one and buy most probably(already model 3 owner) just to support Tesla mission.

Lee Ramer

Yep, can’ wait until the whole industry dies.

REXisKing

MB CEO FIRED.

Will

Good

Will

When

antrik

Fired? Where did you read that? What I have seen was that he merely stepped down somewhat sooner than originally intended…

antrik

Actually, not even stepped down yet. Will step down next year IIRC.

Will

New CEO is young and into electrics. A money man and the one that force MB to make the EQ brand knowing that it needs too or they die

Dave100e

He’s stepping down early to prepare him to be the head of the board of directors, that’s not even close to being fired.

DrDauger

I volunteer to be one of Tesla’s new independent directors.

William

Get your thumbs up and running, so they are ready for a twitter storm!

Doggydogworld

Practice prostrating yourself and saying “yes, your majesty” 🙂

Pushmi-Pullyu

No, that’s “…your divinity”. 😉

TeslaPlease

The Verge stated the agreement includes the following:

‘A LAWYER WILL NOW OVERSEE MUSK’S COMMUNICATIONS — INCLUDING HIS TWEETS’

antrik

There is no actual mention of “a lawyer” in the settlement…

(I’m not sure what “overseeing” implies exactly, since the way I read it, only tweets that could constitute material disclosure will need explicit approval from Tesla…)

Get Real

Well, in TeslaPlease’s feeble mind, its all the same!

Benz
Question With the knowledge we currently have, and looking back to how this scenario has played out, could we conclude the following: The Saudi’s asked Elon Musk several times (during a period of almost two years) to take Tesla private. After having thought about it Elon Musk himself was ok with taking Tesla private. Then he had send that tweet (“Funding secured”). But later on he cancelled the plan to take Tesla private. Shareholders didn’t want him to take Tesla private. Elon Musk respected the opinion of the shareholders. That means he did one step forward, and later on he did one step back again. I think that Elon Musk should have talked to a number of shareholders first, before sending out that tweet. If Elon Musk at that time (before sending out that tweet) had found out that the shareholders were against the plan of taking Tesla private, then Elon Musk probably would not have sent out that tweet at all. Then he would just have called the Saudi’s to let them know that he will not be taking Tesla private. And nobody would have accused Elon Musk of anything. Elon Musk would still have been able to remain… Read more »
Spider-Dan

The bulk of the problem with that tweet was in two words: “Funding secured.” Musk can consider taking Tesla private at any price he can imagine, but when he says that he has funding secured to take it private at $420, the market is going to respond with force.

Doggydogworld

Exactly. “Only contingent on shareholder vote” was the other major problem.

They also cited “shareholders can stay in via SPV”, but I think that was a lesser issue.

antrik

That’s mostly like I see it, except that the contention was not about lack of shareholder approval (indeed he explicitly stated that as a condition for the deal, so that was not misleading), but rather that apparently he didn’t have any firm agreement on specific terms with the Saudis, nor had he checked other hurdles in advance, such as the feasibility of the deal regarding shareholder structure etc.

Doggydogworld

Right, when he tweeted that it was “only” contingent on a shareholder vote it meant the deal had already cleared all the other hurdles, e.g. board vote, CFIUS approval, SPV structure, etc. In fact, Musk hadn’t even given the board a vote-able proposal or explored the regulatory issues.

Elon Musk doesn’t see hurdles, that’s what makes him Elon Musk. That’s also why he trips over so many of those hurdles, and needs someone to monitor his external communications.

Pushmi-Pullyu

“Is this a correct view of what actually has happened?”

I think we should take a step further back, and ask ourselves what mental state Elon was in when he sent out the infamous Tweet. According to reports on both BBC America News and PBS News Hour, Elon arrived at the $420 figure by adding 20% to the current stock price, and rounding up to 420 both as a marijuana reference and “to impress his girlfriend”.

Impulsively tweeting out idiotic things to impress a girlfriend doesn’t sound like something that CEOs of major companies do while they are sober. Not even iconoclastic CEOs like Elon Musk.

No, I think the real problem is Elon posting when he is — as they say — “in a chemically altered state of consciousness”. And if so, then merely forcing Elon to agree not to tweet out anything material affecting Tesla without some company lawyer or exec signing off on it… may be insufficient. IMHO, what needs to happen is a physical separation between Elon and his Twitter account, so every post needs to be approved by an actual human being other than Elon before it’s posted.

All just my opinion, of course.

James

What a mess. It’s good he will no longer be chairman. He needs to have some checks on his hubris before he sinks the company, and now they can get rid of him if he gets any worse. Musk needs a long vacation and to start trusting people. Hire good people, pay them well, then go off and do something else. They don’t need him sleeping on the assembly line anymore.

Counterpoint

He’s still the CEO and still on the board, just not the chairman of the board. Mr. Musk isn’t going anywhere.

antrik

Actually, as long as there are serious problems coming up (which will likely be always), they *do* need him “sleeping on the assembly line”. (Well, maybe not literally — he admitted himself that it’s more of a symbolic gesture…) His propensity to drill down to the fundamentals whenever there is a problem, and make good decisions addressing the issues effectively, is a major reason for the success of his endeavours against all odds. It’s very unlikely they can hire someone as good at this as Elon.

Ricardo

It’s not a symbolic gesture. It’s the hype machine.

Speculawyer

You realize that Chairman is basically just a ceremonial position, right? It means pretty much nothing.

Pushmi-Pullyu

If the rest of the board are mostly composed of the Chairman’s relatives and close friends, as was the case with Eon as Chairman, then that’s very far from a “merely ceremonial” position.

If nothing else, the Chairman gets to set the agenda at board meetings. The actual interpersonal politics of different Boards of Directors will be as different as the people who make them up, but belittling the position of Chairman of the Board of a major corporation as merely a “ceremonial position”, as if he had no more actual authority than the Queen of England, is rather far from the truth in many or most cases.

esto perpetua

Beeing Long ( VERY Long) TSLA, this fiasco cost me a lot of money. But if the end is good, all’s good. GO TESLA!

Rolando

Monday morning TSLA will shoot up after this settlement and recover from the Friday losses.
Elon Musk announced that he will buy $20 million additional shares Monday for this low rice (Bloomberg article).

MTN Ranger

It only cost you if you sold. Stock price will be back to $300 soon.

esto perpetua

Fear of a margin call or covering Puts in the money ( these events could wipe you out) are reasons to sell and take a loss. I like to think that Elon set a trap for the shorts on Thursday and we will see that famous Epic Short Squeeze starting Monday. I’m ready.

ziv

If I was a short, I would jump ship Monday morning. TSLA is never again going to be lower than Monday at around 10 am.

Dam

Ever heard of DOJ 😉

esto perpetua

DOJ action is very unlikely after the settlement. A criminal case would be very difficult to prove. But don’t tell this to the shorts. I need buyers for my puts.

Alan Campbell

This sounds like a good deal all around. Tesla or Musk did need a ‘filter’ for what he was able to tweet or say that impacted investors. And as far as not being chairman, well his brother is on the board, and it doesn’t say he can’t also be on the board. Along with the board actually tweeting their own message that they are behind Musk and his mission. So I see this as just a little corporate housekeeping, and maybe without being chairman of the board, he has more time to focus on other matters.

And now all this will get overshadowed by the huge number of cars Tesla has manufactured and delivered for August and 3rd Quarter, along with reaching profitability.

I wonder if now the board is ready to take Tesla private?

Rolando

The problem is not that the board will take Tesla private – the crony board is post-hoc rubber-stamping anything Elon wants …..

The problems with take private is that
(1) large institutional investors are not allowed to invest in a (not trade-able = not liquid) private company;
(2) stock retailers can’t retail private shares;
(3) ten-thousands of small shareholders can’t either be part of a private company.

Saudi fund has limited free cash laying around, at least not $50 billion to squeeze out all others, and they prefers liquid e.g. public listed/traded shares, Saudis would have max stayed with their 4.9% on board when going private.

antrik

It’s the Saudis who repeatedly proposed taking Tesla private. (Which seems to be what prompted Elon to start the whole thing in the first place…) Obviously, they do *not* prefer public shares.

Doggydogworld

This is a win for shareholders, no doubt.

Going private was never a realistic option. Certainly not at 420. Musk made a bunch of absurd assumptions. He was in Ahab mode.

Nelson

“According to the SEC’s complaint, Musk’s misleading tweets caused Tesla’s stock price to jump by over six percent on August 7, and led to significant market disruption.”

“Musk and Tesla will each pay a separate $20 million penalty. The $40 million in penalties will be distributed to harmed investors under a court-approved process.”

Who will pay current investors for the drop in TSLA stock price caused by the SEC’s actions?

NPNS! SBF!
Volt#672 + BoltEV + Model 3

MTN Ranger

If investors sold then they were idiots. Stock price will be back to $300 next week.

Spider-Dan

If your CEO is in the habit of making statements that result in settlements and fines from the SEC, a drop in stock price is warranted. TSLA stock price now has to bake in the next crazy thing Musk decides to do.

Doggydogworld

Can’t call it a habit yet.

Next crazy thing will be caught by review process and squelched. Maybe.

Prsnep

“Who will pay current investors for the drop in TSLA stock price caused by the SEC’s actions?”

Does the SEC have a mandate to enforce rules regarding how information is released by companies? Was Musk in violation of those rules? If the answer to the first 2 questions is yes, what do you propose they’d done instead?

Pushmi-Pullyu

I presume they’re not actually serious about the SEC being liable for a drop in stock price resulting from the SEC performing as it should, as a legally constituted investigative agency with a mandate to investigate exactly the kind of irresponsible behavior Elon exhibited.

I think it’s just more or less expected grumbling in the ranks of EV advocates. There’s a saying from WW II: “A griping soldier is a happy soldier.” 😉

Speculawyer

As I said…it would get settled and everyone will just move on. Ain’t no big thang.

LOL, there were over 430+ comments on the previous story about this. So much bashing over nothing.

Pushmi-Pullyu

Both BBC America News and the PBS News Hour had major segments on this. If it’s a tempest in a teapot, it’s an awfully big teapot!

Perhaps long term this will have little effect on Tesla and its investors, but it certainly has attracted a lot of attention.

JohnR

I’m getting my MX as I write this. Go Elon! No panic! They’re not going to roll out the red carpet for you. They’re going to make it tough, politicians and interest groups are going to do everything they can to bring you down, the problem is that it’s too late, too many people like myself have been inspired, the tide has turned and you’re all now just sore losers.

wavelet
“Good news is that he remains in charge of Tesla as its CEO” No, that’s really bad news for anyone who cares about the company’s future. No matter how visionary the guy is, or good with startups, Musk proved he’s irresponsible & can’t be trusted with a senior management position in a large company. Fines aside, he basically got a minor slap on the wrist. Since he’s the largest stockholder, and has buddies on the board (even if it’ll be enlarged by a couple of independent directors as reported), he’ll still maintain pretty much the same level of control of the company he has now. IMO, he’s unworthy of any authority position in a public company, and the SEC should have insisted on no executive Officer position whatsoever ever, and no board position for 10 years years in any public company. Since the SEC went to the trouble of filing the suit ASAP, and only after Musk refused to settle, and the suit looked pretty airtight, I wonder why they folded so quickly. Very weak sauce. Only hope now is that investors manage to force him out, maybe with the assistance of shareholder lawsuits. The various mostly small criticisms I… Read more »
Get Real

“…cant be trusted…”, right /s.

That doesn’t jive with the FACT that Musk has been instrumental in running 3 seperate billion dollar companies already.

You are showing some hardcore anti-Musk bias here wave.

wavelet

Two, not three (not that that affects your point).
Thing is, not all companies are the same. Going forward, once it’s making 100K s of cars/year (and I’m very happy there’s a BEV company doing so), you don’t necessarily want an inventive entrepreneur running the company. You want someone good at scaling a heavy-manufacturing oriented company. Most startups go through this, and rarely does the original CEO continue long term. It’s a bit more likely with pure-software companies, but not when the company needs more and more to rely on heavy plants, supply chains, marketing etc. This all the more the case in heavy manufacturing.

antrik

When you want the company to turn from making hundreds of thousands of cars to making millions of cars — which all current investors expect, going by the stock price — you very much need an “inventive” CEO.

antrik

It’s indeed been three billion-dollar companies. Don’t forget his time at PayPal.

Will

What happen to him at PayPal

Doggydogworld

Musk’s company merged with the company that created PayPal. Musk was named CEO of the combined company, then fired after a few months

Counterpoint

Most lawsuits are settled. Neither side wants a lengthy expensive court battle.

Twitter is how Tesla advertises, and it’s very effective. I think aside from occasionally being impulsive and micromanaging, Mr. Musk seems more of an advantage to Tesla than a detriment. Keep in mind, Tesla is selling more cars each month. CEO must be doing something right…

antrik

The case wasn’t airtight at all. Going by other comments, the SEC would have had to prove that Musk did something he *knew* was wrong — which isn’t clear at all.

I guess it’s true that having an overstressed Musk as CEO is somewhat of a risk — but *not* having him as CEO is a guaranteed downside. A majority of investors clearly wants him to stay; in fact, a host of analysts expressed a belief that $TSLA would lose significant value without him…

Doggydogworld

The standard is “knew or should have known”. SEC only needed to show the tweets were false and reckless. No case is ever perfectly airtight, but this was as close as it gets. Musk’s only real hope at trial was jury nullification.

TM21

Those are not downsides, I think it best he act as CEO, but have a chairman insert some sanity from time to time and tweet discipline is sorely needed. The funny thing is, I think the stock will rebound on Monday and the shorts will be on fire again. Wish I had bought some on Friday. Didn’t expect this to settle so quickly.

antrik

Should have bought after the weed episode — stock dipped even deeper after that, yet it was obvious that this would blow over pretty soon 🙂

I agree about “tweet discipline”. As for the chairman thing… Considering that Musk’s problematic moves are all impulsive, I don’t think a chairman could actually do anything about them. His deliberate moves on the other hand tend to be almost always right — so any interference in his decisions is more likely to be harmful.

(Yes, he does make mistakes — but there is likely nobody who can tell in advance his actual mistakes from things that look crazy to others yet turn out actually to be excellent decisions…)

Pushmi-Pullyu

“…obvious that this would blow over pretty soon”

I see what you did there. 🙂

Terawatt

One wonders how the settlement terms compare to those declined by Musk just prior to the SEC filling the suit. Hopefully Elon will consult a “top lawyer” *first* in any similar situation in the future.

Hopefully the criminal investigation apparently underway at the DoJ will not lead to any further distractions.

Terawatt

Audi CEO Rupert Stadler would be a good cellmate for Elon, but I guess that’s not going to happen.

(Stadler was arrested, but the investigation is ongoing, no charges have been brought at this point AFAIK. And while Elon might of course be charged by the DoJ, that hasn’t happened either. Even if both were charged, found guilty, and imprisoned, there’s no chance they’d serve their sentences even on the same continent. Just to be abundantly clear this is just an absurd, and I think hilarious, thought, a kind of joke. So don’t get yourself worked up.)

Some Guy

Your comment is incorect. First of all, Stadler is imprisoned in Germany and Germany does not expedite citizens for anything. Second of all, Stadler has not yet faced trial, and such is kept in solitary without visitors, in order for him not to tamper with the ongoing investigation (or getting harmed by another inmate in case he is later on found not guilty). He thus can’t have a cellmate.
But the whole SEC thing is highly suspicious to me anyway. The stock was already rising before Musk tweeted, as the Suadi investmant had leaked. No one can now for sure what would have happend without the tweet.

antrik

The stock was rising after the earnings call. The significant Saudi investment probably also contributed to it, simply because they bought a lot of stock. I’m not sure the news of their investment was all that meaningful…

antrik

Equating some reckless tweeting with criminal activity harming the public at large, is not funny.

viriato

I think Musk is harmful for Tesla from a time ago. In my opinion, now Tesla will be more quiet and will expend less energies in polemics, and nosenses. They must to be focused in solving the problems they have, and let the Musk protagonism apparts from the company. As I had read a days ago, Tesla must be like Apple, even when the charismatic founder is gone, the company must keep on.

Pushmi-Pullyu

The founders of Tesla were Martin Eberhard and Marc Tarpenning; if there was a third, it was Ian Wright.

Elon Musk wrested control of Tesla from its founders, but he is by no means the “charismatic founder”, despite the fact that Elon used a lawsuit to get a court to say he had a right to call himself that. (Pravda occasionally existed in the U.S., too… even before the Trumpster era.)

Benz

That tweet (“Funding secured”) was a bullit that had left the gun.

Once the bullit leaves the gun, it will hit a target.

Before pulling the trigger, Elon Musk should have been absolutely sure that “taking Tesla private” was a good decision. And that means that he already should have known what the majority of the shareholders say about the plan to take Tesla private.

Ziv

I think you meant bullet. But if not, here is the best Bullitt around. Classic.

https://www.youtube.com/watch?v=0vNvc9n1ikI

I saw the 390 GT Fastback on the Mall last summer. I can’t find the uncut version with the city driving but this is still good.

Benz

My vocabulary is clearly not as good as is should be.

I’m actually totally not interested in guns and bullets.

EV’s and kWh’s make much more sense to me.

Ziv

I figured it was an honest error but the reminder of the movie made me want to post a link to the car chase scene. It is probably my favorite action scene ever. No CGI, all real drivers and real cars.

antrik

The point of the tweet was informing shareholders. It’s *not* what made it problematic…

Bill Howland

This is admittedly just anecdotal, but I’ve asked a few new Model 3 owners about the reliability of their cars and everyone I’ve talked to is satisfied with the car.

At the rate they are producing the car – if this level of ‘reliability’ can be maintained, then Tesla is obviously doing something right and the production rate is high enough that it Is a Good Thing Tesla is doing since it makes other automakers squirm a bit since they obviously must be losing sales to Tesla. To the extent that Musk is responsible for this, to that extent he is to be congratulated.

Benz

Elon Musk should first have asked himself: “What will the shareholders say about taking Tesla private?”

Perhaps a conference call or a meeting with a certain number of (large) shareholders would have given him an idea of what these shareholders would think about “taking Tesla private”?

Elon Musk would then already have found out that the shareholders were against the plan to “take Tesla private”.

And then Elon Musk would never have had to sent that “Funding secured” tweet at all.

That would have saved Elon Musk and Tesla a lot of trouble.

antrik

You are repeating yourself. Again, that’s not what the SEC took issue with. (Also, he explained why he did it this way: talking to some shareholders in advance would be unfair towards the others.)

Another Euro point of view

If it was one of this lawyer advising him to settle than it is a good lawyer. To me main aspect of this settlement is that Musk will have to stop tweeting nonsense. By forcing this upon Musk SEC is making Musk a huge favor, to him and Tesla, probably he does not realize it. Following the whole story what was funny to read is that a significant part of the fanboys shared the same analysis than many shorts. That all of it was a conspiracy. The fanboys thinking SEC was too harsch and shorts that SEC was to soft. They both have much more in common they could possibly imagine. A big family aspiring for a simple world to put it politely.

a-kindred-soul
We must understand that Musk has a different life experience than many of us. He said he would lower the cost of putting satellites in orbit by creating a new rocket company and 99,5% of people in the know said that that was impossible. But he created SpaceX and succeeded. He said he was going to build a mass-produced electric car that was better than a BMW 3, and people said it was impossible, but Tesla did it. So when he said he was considering taking Tesla private and funding was secured, he saw it as a next challenge. He didn’t really lie since he had the experience that he could get a lot of things done. And since the Saudi state fund had shown a willingness as had the board – however, both not officially and in writing – he felt he could succeed in pushing it. It was in the interest of Tesla and therefore the interest of the investors. However, building rockets is based on physics, so if fundamental principles tell you it can be done in principle, you have a chance of succeeding. The same is true for building cars and engineering. But creating a fund,… Read more »
Chris

“According to the SEC’s complaint, Musk’s misleading tweets caused Tesla’s stock price to jump by over six percent on August 7, and led to significant market disruption.”

And the SEC’s over-the-top charges on Thursday, which were completely disproportionate to the alleged infraction, caused Tesla’s stock price to drop by 14% on Sept. 28, which has led to significant disruption to investors, including myself. Who wants to start a class-action lawsuit against the SEC for $40M/6%*14% = $93M?

William

The SEC would probably appreciate your legal teams C-A lawsuit. They would unfortunately, just brush it aside, as it would have no merit.

The shorts have had their day of collecting profits this last week, but these next weeks won’t be so kind to them, if they haven’t exited their short positions entirely.

Milfan

Fantastic news. I am sure Tesla & Musk will recover their $20 million each since the Model-3 production hit the goal and also the sales will increase this quarter.

Its high time, Musk takes the company private so that they don’t need to face any such trouble in the future. No more requirement for quarterly reporting, they can report on any monthly frequency.

For ex: if the company decides to report once in 2 months, suddenly SEC may say that there is no such rule and will fine the company.
This whole case is just a baseless allegation to charge and extract money from the company.

Roy LeMeur

Does anyone else see parallels between Elon Musk and the Thomas Newton character from the 1976 film “The Man Who Fell to Earth” played by David Bowie?

Pushmi-Pullyu

No, not at all. “The Man Who Fell to Earth” is probably one of the most forgettable films I’ve ever wasted my time watching.

Contrariwise, Elon Musk is one of the most unforgettable people alive. Furthermore, his accomplishments are, if anything, even more remarkable and memorable.

https://www.youtube.com/watch?v=4zuQjHEjMuY

Madan R

2 days ago businessinsider claimed that GM has dethroned Tesla in market cap. I guess today Tesla has captured that spot again.
Shame on businessinsider for being so biased. As a news agency, they don’t do fair reporting.