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Elon Musk Should Be Held In Contempt For Tweet, SEC Tells Judge (fastcompany.com) 274

Posted by BeauHD from the now-he's-done-it dept.
The Securities and Exchange Commission has asked a federal judge to hold CEO Elon Musk in contempt for breaking terms of a settlement agreement with a tweet. The SEC cited an "inaccurate" February 19 tweet about production. Musk tweeted alongside a photo: "4000 Tesla cars loading in SF for Europe." He replied to the tweet adding: "Tesla made 0 cars in 2011, but will make around 500k in 2019." Fast Company reports: It's that "will make around 500K in 2019" part that angered the SEC, which had this to say in legal papers filed with a Manhattan federal court: "He once again published inaccurate and material information about Tesla to his over 24 million Twitter followers, including members of the press, and made this inaccurate information available to anyone with Internet access." The SEC says the tweet violated an agreement that was part of a settlement Tesla made with the regulator last year. Musk promised to consult with Tesla's board before he made any statements on social media that could affect the stock price of the company. Tesla also agreed to pay $40 million in penalties and Musk agreed to step down as chairman of the board.
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Elon Musk Should Be Held In Contempt For Tweet, SEC Tells Judge More

Elon Musk Should Be Held In Contempt For Tweet, SEC Tells Judge

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  • Fake News (Score:5, Informative)

    by SuperKendall ( 25149 ) on Monday February 25, 2019 @10:35PM (#58180330)

    As Elon pointed out, he gave that figure in the last earnings report [twitter.com] way before that tweet....

    Like Musk said - how embarrassing for the FCC! It sure does seem like someone there has it in for Tesla, very likely someone at the FCC is compromised by some large short holder that is sweating bullets.

    • Re: (Score:3, Insightful)

      by 110010001000 ( 697113 )
      Why would a short be sweating bullets? The stock is down 15% over the last 12 months. You Musk cultists are something else. Jobs died and you had to find another "hero" I guess. You guys need to find better heros.

      • Why would a short be sweating bullets? The stock is down 15% over the last 12 months.

        Shorties may still be sweating if their strike price is lower than 15%. Many shorties were betting on a collapse into bankruptcy.

        • Re:Fake News (Score:5, Interesting)

          by _merlin ( 160982 ) on Tuesday February 26, 2019 @12:43AM (#58180726) Homepage Journal

          You're confusing options with delta 1 instruments. If someone was betting that the stock price would collapse, the easiest way to make a profit on it (i.e. requiring least initial outlay, margin and maintenance) is to buy a put option. You do that, and if the price falls below the strike price you make some money. If it doesn't fall below the strike price, you just lose the premium you paid for the option. No need to sweat bullets - you've already paid, you're not up for any other losses.

          Now if you want to post a bit more margin, you can write a call option. In this case, you're paid the premium, and if the stock ends above the strike price, you pay the difference. In this case you want to hope that the premium you got when you wrote the option is going to be bigger than the difference between the stock price and the strike price at expiry. But if you're writing options without delta hedging, you're basically gambling, so if you lose you got what was coming to you.

          If you want a short delta 1 instrument, the lowest initial outlay is a contract for differences (CFD). With this you get a delta 1 position, but you pay maintenance each month. The stock price needs to fall at rate faster than the maintenance you're paying on your CFD position. You're not going to be shitting bricks in this case either. You've been paying the whole time you've had your position open, and if the stock price isn't falling fast enough you just swallow the loss so far and close the position.

          Actual short stock positions require an arrangement with a security lender if you want to hold them for more than a day. The lender is going to charge you maintenance on the position and require you to post margin. So as with the CFD, you'd cut your losses at some point if the stock price isn't falling as fast as you'd like.

          I'm not going to try and give an overview of futures here, but as with the other delta 1 strategies there's no strike price involved. The only people who'd be shitting bricks would be people who wrote deep in-the-money calls and didn't hedge their positions. But they should've known what they were getting into.

      • Re:Fake News (Score:5, Insightful)

        by No Longer an AC ( 4611353 ) on Tuesday February 26, 2019 @01:11AM (#58180796) Journal

        I think Steve Jobs was an asshole, but I also consider him a hero and more importantly a genius.

        And I think Elon Musk is an idiot, but he's also a genius...and a hero. Okay, maybe not a hero, but I'm jealous of his success and I really do wish I had a Tesla and also a rocket that could launch me to Mars.

        I'll get a Tesla sooner or later. As soon as the transmission falls out of my 20 year old Detroit garbage which the "Check Engine" light tells me is due to happen any mile now.

        I do keep hearing horror stories about Teslas, but most of them sound overblown and I've been hearing horror stories about cars all my life. Did you ever hear the one about the Pinto?

        I only say Musk is an idiot because he sometimes blurts out stupid stuff that he probably wouldn't say if he weren't so stoned (kind of like me). All the problems with Tesla...quality control, production numbers, whatever...those are all expected from a relatively new car manufacturer and when was the last time a new car manufacturer ramped up to the level of Ford or GM?

        Tesla still has a long way to go, but when Ford recalls nearly 2 million vehicles.... [fortune.com] I dunno...I guess when Ford recalls 2 million vehicles I'm glad I drive a Chrysler.

        So Ford just recalled 1.8 million vehicles which nearly equals their annual production of 1.9 million vehicles. Holy shit! Can you imagine the bad press that would ensue if Tesla had to do that? But with Ford, hardly anyone blinks an eye.

        • Re:Fake News (Score:4, Funny)

          by No Longer an AC ( 4611353 ) on Tuesday February 26, 2019 @01:18AM (#58180812) Journal

          DAMMIT!

          I wanted to make some snarky comments and I accidentally hit submit before I was done!

          From the link in my previous post:

          a transmission flaw that could cause the vehicles to downshift to first gear with no warning.

          Fortunately I drive a Chrysler so it's like I'm always in first gear anyway.

          Also impacted— by separate issues—were select Lincoln Continentals made between 2017 and

          Did Fortune REALLY say "impacted" when referring to certain car models?

          This is how words like "phrasing" come into common speech. At least my car hasn't been impacted.

        • Re:Fake News (Score:4, Insightful)

          by AmiMoJo ( 196126 ) on Tuesday February 26, 2019 @05:55AM (#58181370) Homepage Journal

          What boggles the mind is that Musk just can't resist tweeting about Tesla production numbers even after he was told by a court not to and fined $40 million.

          How hard is it to just avoid tweeting about that stuff?

        • Well for what it's worth I love my Tesla. For the money, they could have done a bit more I think in terms of interior design (is it a sports car? Or a sedan? Make up your mind. If sedan, think of families), and post-ownership the sales interaction I get is almost non-existent compared to other cars.

          But it is fun to drive, and does exactly what it should do. It is far more fuel efficient than the gas car, and my transportation costs have decreased considerably. I've watched the gas station sign change 30% in

          • I mean, minivans are notorious for being under-engined. But I don't understand people whose transportation costs are lowered by getting a Tesla. My transport costs are lower than just the purchase price of a Tesla (amortized over expected lifetime, etc).

            But a regular gas car (not minivan) tends to work pretty well. And, givien that the constraint for my dirivng isn't the car, but the cars around me, it's hard to imagine wanting to upgrade the vehicle for speed. Hell, it would just make me more frustrat

        • Tesla still has a long way to go, but when Ford recalls nearly 2 million vehicles.... I dunno...I guess when Ford recalls 2 million vehicles I'm glad I drive a Chrysler.

          You are aware that Chrysler is generally at or near the bottom [usatoday.com] of the quality rankings and that they have numerous huge recalls [cnbc.com] of their own... right?

          So Ford just recalled 1.8 million vehicles which nearly equals their annual production of 1.9 million vehicles.

          Umm... You might want to check your figures [wikipedia.org]. Ford sells more than that in the US alone each year with global production around 6 million per year.

        • So Ford just recalled 1.8 million vehicles which nearly equals their annual production of 1.9 million vehicles. Holy shit! Can you imagine the bad press that would ensue if Tesla had to do that? But with Ford, hardly anyone blinks an eye.

          That is an expected result for Ford. FORD = Found On Road Dead

          Tesla is held to a higher standard, rightfully or not. *shrug*

          I doubt I will ever buy a Tesla (I don't want information transmitters outside of my control and inside of my car), but I will NEVER willingly buy a Ford.

      • Re: (Score:2)

        by lgw ( 121541 )

        hy would a short be sweating bullets? The stock is down 15% over the last 12 months.

        I've been long Tesla stock from time to time. My buddy goes short from time to time. We both make money.

        Tesla's been going violently sideways for almost two years now, and it went sideways for three and a half years before that. It's much ado about nothing.

    • earnings report stated 350k-500k. by stating it would be approximately 500k he has released material information that the numbers would be on the high side of the estimate.

    • As Elon pointed out, he gave that figure in the last earnings report way before that tweet....

      The fact that the figure he tweeted had previously been disclosed is irrelevant. The SEC's argument isn't that he published new undisclosed information outside of the regular financial statements. They're saying that he broke the terms of his settlement, where he agreed not to publish anything written (including tweets) without first getting them approved (though I'm unclear on who exactly is supposed to do the

    • Actually Musk agreed to get permissions BEFORE he posts such information. So Musk is in violation.

      You can stop dick suck Musk now.
    • And yet not in a shareholder letter issued before which said

      "In total, we are expecting to deliver 360,000 to 400,000 vehicles in 2019, representing a growth of approximately 45% to 65% compared to 2018. In this range, we are expecting to have posit ive GAAP net income and to generate positive free cash flow (operating cash flow less capex) in every quarter beyond Q1 2019. We believe these results will be substantially driven by our restructuring action and the ongoing financial discipl ine with whi

  • To see if he was right before saying this tweet was wrong? He did correct himself and say it was closer to 400k but would end with a run rate of 500k (10k / week).

    • Re:Shouldn't we wait (Score:5, Insightful)

      by 110010001000 ( 697113 ) on Monday February 25, 2019 @10:42PM (#58180366) Homepage Journal
      It has nothing to do with the tweet being "wrong" or "right". The settlement is that his Tweets need to be approved, and they aren't.
      • I agree it is bad. SEC is going to ask to see their oversight process for Elon. Wish he kept his mouth shut. He should not be tweeting.
    • right or wrong is irrelevant, he isn't allowed to tweet material information without approval.

  • The only way to win is not to play. It's not worth it.

  • It was inevitable... (Score:3, Interesting)

    by mark-t ( 151149 ) <markt AT nerdflat DOT com> on Monday February 25, 2019 @11:38PM (#58180574) Journal

    It was obvious to me from the outset that the conditions of the settlement effectively place a gag order on Musk that forbids him from mentioning virtually anything about Tesla, since almost anything he might publicly say could affect stock prices.

    If I were him, I'd quit. Sell off his shares of the company to the highest bidder and get as far the hell away as possible from such a blatantly oppressive work environment that only seems to want to ruin the guy. He made his fortune once.... he's a smart guy, he can do it again somewhere else.

    • Re:It was inevitable... (Score:5, Insightful)

      by Jeremi ( 14640 ) on Tuesday February 26, 2019 @12:35AM (#58180708) Homepage

      If I were him, I'd be more careful what I post on Twitter. In fact, I wouldn't post to Twitter at all. There, problem solved.

      • Re: (Score:2)

        by mark-t ( 151149 )

        Like I said... a gag order that effectively prohibits him from talking about anything on social media.

        I'd sell off 100% my shares to the highest bidder and be done with Tesla forever if I were him. It is obvious from this that his ongoing affiliation with them is going to continue to cause harm to the company, and is unreasonably oppressive to his right to express any his own thoughts publicly, since any of them could adversely impact the price of Tesla stock, even if they are entirely true. The simple

      • If I were him, I'd be more careful what I post on Twitter. In fact, I wouldn't post to Twitter at all. There, problem solved.

        Hush you. He posts a lot of really interesting stuff about Spacex. Way more interesting than anything to do with Tesla.

    • Comment removed based on user account deletion

      • Re: (Score:2)

        by mark-t ( 151149 )

        You think getting fired isn't a consequence? Because that's what I think should happen here.

        Hanlon's razor applies: Never attribute to malice what can be explained through ignorance.

        Can you be held in contempt of court for simply being excited about what you do for a living? That is all that has happened here, and telling someone what they are and are not allowed to even FEEL is something I would most definitely call oppressive.

        Consequences certainly, but to treat it as if it's deliberate when it

      • I'm not going to condone breaking investment law, but the guy is a positive force in society, if only because of what he did for cost to near Earth orbit. He'd have to do a lot more bad stuff before becoming a net negative.

    • FFS, mot engineers working on projects I know aren't allowed to tweet about their work. It's not unreasonable from the companies point of view. He should just stop tweeting about Tesla/at all.

      • Re: (Score:2)

        by mark-t ( 151149 )

        Understood... but what they are not allowed to talk about is a closed set of things, not being allowed to say anything on social media that might affect stock prices is an unbounded set.

        For chrissake, this post wasn't Musk trying to manipulate stocks or trying to disregard a court order, it comes across entirely as a guy being happy and excited about the direction he saw the company going.

        If the guy can't even publicly talk about *that* without being called out for supposedly affecting stock prices, th

  • Even if what Musk is doing is somehow unethical, it's bullshit. The SEC goes ripshit on him for puffing himself up on Twitter, but never says boo about normal everyday fuckery that is far worse. This is the agency that gives a dumb smile and a thumbs-up through every fraud-driven speculation bubble, every stock manipulation, and every business destruction by buyout and offloading of debt, all of which the news just makes up dumb garbage to explain. (For example, your gas prices pretty much never go up becau

  • What you should get out of this article: (Score:5, Insightful)

    by ZenShadow ( 101870 ) on Tuesday February 26, 2019 @02:46AM (#58180998) Homepage

    We should all be far more concerned that people are basing financial decisions on something posted on Twitter of all places.

    • Re: (Score:2)

      by bws111 ( 1216812 )

      That is the whole point. Some people WILL base their decisions on any available information. This can give them a significant advantage over people who only trust 'official' sources of information. Hence, the rule that all material information must only come from official sources.

      • This can give them a significant advantage over people who only trust 'official' sources of information.

        Or a significant disadvantage, if their 'unofficial' sources are wrong. Deciding which sources to trust is part of an investor's job. The SEC is essentially "leveling the playing field" by neutralizing an advantage more skilled investors have over less skilled ones, and by doing so, eliminating an important feedback mechanism which would select for more accurate information about the market.

    • We should all be far more concerned that people are basing financial decisions on something posted on Twitter of all places.

      Hm. It is Mr. Musk using Twitter, so it is a valid source, which is what gives the government leeway to go after him. What I find absurd is that the language is casual. Absolutely NOBODY should be expecting firm results based on casual language. Words like "almost" and "around" are not words that say anything definite. If it is not definite, why is it a problem?

  • Once Musk got into hot water with the SEC, he should have turned all his social media posting over to a small group of professional outreach people with a lawyer on the team. Why he kept control of it himself is a mystery to me. You do NOT screw with an SEC order like that. Ouch, what a dumb lesson for a very intelligent person to have to learn the hard way.

    Kind of reminds me of the Roger Stone situation. This is a VERY media-savvy guy. For some reason, he thought that he could get away with posting ph

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