SEC Charges Tesla CEO Elon Musk with Fraud for Irresponsible Social Media Posts

[bluesynk]

A group of people got together and figured out how to make money on stocks that performed poorly, short sellers. They had gotten in tight with tesla and made money when they lost money. I would not like it if someone profited off of my loss, neither did he. This one statement messed those guys up bad. Elon took away their secret santa. Im almost positive he very carefully thought this out, and figured out how to stop people from making money off him losing.

 

[RogueTadhg]

Suing for "Irresponsible social media posts".

Heh. Heh. heh.

 

[RealBeast]

View attachment 107088

Elon should star in a remake of Reefer Madness.

 

[theBrownLlama]

dude tweeted for everyone .
kinda a straightforward fine , the way i see things

 

[theBrownLlama]

Twitter is not a press release platform. Posting something there is as good as saying something off hand in a small crowd. Is that considered fraud now? Because then I'm constantly engaged in fraud when jokingly talking to friends.

so if he tweets Tesla would be releasing a new car and will be taking orders soon but 'as a joke', then it is a-ok?

man, is it easy living as a rich man in your world.

 

[Blaze Wedgewood]

Like the guy or not, as the CEO of a publicly traded company he has a fiduciary requirement to protect his shareholders. By trying to blatantly (and quite stupidly) manipulate the stock price he failed to do that. It's very simple and the investigation went very quickly for the SEC due to the public twitter postings. Nobody is "out to get him" as many are saying or implying. Many CEO's and other company officers have been fined and removed for this type of behavior.

Once he took the company public he fell under an entirely different set of laws than when he was private. If he wanted to operate in the manner he has been he should have never went public. But of course there was big money to be made for him so he did. As Gordon Gecko once said, "Greed is good!".

 

[theBrownLlama]

I find it hilarious and sad a 9 word tweet is fraud now. The stock market is a gamble in the first place it used to be looking at charts, sales and predictions to figure out what a stock was worth.

I remember around 2008 Steve jobs coughing a few times at a keynote and the stock dropping is that fraud? Hell Trump tweets a bunch of crazy stuff true or not and it shifts the stock market one around, is that fraud as well? Jeff Bezos warren buffett and bill gates have a meeting on Healthcare and healthcare stocks tank is that fraud now? Any powerful person can do the tinniest thing and Shareholders are so twitchy even the tinyest shift of the wind can greatly impact stocks. Now people cry foul when a unforeseen circumstance shifts the market because they lose money it is pathetic.

those are media speculations

this is straight out saying he's taking Tesla private, with money secured.

HUGE difference.

but ppl treat Musk like a god on tech forums. ( like on Ars )

 

[Shmee]

The SEC doesn't play around. Musk knew the stock would go crazy if he tweeted out that he was taking the company private. He also knows you can't make those kind of tweets/statements if you are a CEO. If he didn't, than he shouldn't be a CEO.

 

[Dead Parrot]

One of the downsides to being an officer of a publicly traded company is you are limited in the types of statements you can make without violating one of the piles of SEC rules. Musk knows or should have known this. He has been playing in this arena far too long to play the "But I didn't know that" card. He screwed up and now there is a process to go through and possibly a price to pay.

 

[M76]

so if he tweets Tesla would be releasing a new car and will be taking orders soon but 'as a joke', then it is a-ok?

man, is it easy living as a rich man in your world.

What if I tweeted that (say for the sake of argument that I actually have a twitter account)?

Does he get different treatment in front of the law because he's rich and famous?

 

[M76]

Yeah, I remember the good old days, just jokingly talking in a "small crowd" of 22.7 million of my friends...

So you're saying different rules apply to me because my following only consist of a fraction of people? What about equality?

 

[phawkins633]

Someone smoking pot and making dumb statements. whoddathunkit?

Except it's not just "someone"....you act as though he's just some regular guy being silly. He's not. Because he has eyes on him (regardless of the big bad oil companies or the icky old SEC) he has an even bigger reason NOT to go and make stupid irresponsible remarks......anywhere. He also has a legal responsibility to his shareholders. No one is picking on him...he knows the rules.

 

[SighTurtle]

So you're saying different rules apply to me because my following only consist of a fraction of people? What about equality?

Equality? Elon Musk is the CEO of a publicly traded company, no fucking shit different rules apply to him. Twitter is a public forum, his tweets aren't restricted to his just followers, and aside from the fact that companies do indeed communicate on social media, Elon musk has a history of making tweets intended for consumers, not to mention investors, frequently doing updates on products, communicating with customers on products, etc etc. Are you a CEO or some other important company representative? Perhaps the only reason you haven't been told to reign in your social media is cause no one cares in your fraction of followers. Elon Musk, his company is high profile, and gets more visibility naturally. Unless your gonna be complaining about the lack of equality in followers next.

 

[capt_cope]

So you're saying different rules apply to me because my following only consist of a fraction of people? What about equality?

No, different rules apply to you because you're not the CEO of a publicly traded company and he is (or are you... the plot thickens ) Posting something on twitter is still broadcasting it to the public, even if you haven't got a single follower. It so happens that Musk has 22.7 million people subscribed to his tweets, which is why I was pointing out the absurdity of your "offhand comment in a small crowd" comparison. A better comparison would be an "offhand comment" into the PA system during the Olympics (or any other internationally televised event.)

If Musk had even a modicum of common sense he'd have removed himself from twitter a LONG time ago - so far he's managed to get himself charged with fraud by the SEC, he's catching flak from the national labor relations board for his tweet about unions, and he's being sued for libel by the cave diver guy. What's next? Will he start tweeting bomb-threats?

 

[raz-0]

They don't have enough to make anything substantial stick, they will find a bit of circumstantial evidence but nothing concrete.

Speculative public statements that impact stock prices have always been subject to penalties. If it was real at the time, saying it was grossly irresponsible and caused the shareholders to lose out on a huge payday. Or it was deliberately torpedoing something he didn't want and caused the share holders to miss out on a payday. If it wasn't real, it was a statement to fuck with people shorting Tesla stock. It did. It's still price manipulation.

As a CEO, he should, and I guarantee you he did, know better. If the dude is having a breakdown, I can understand it, but I don't think the SEC will care.

 

[Verge]

A group of people got together and figured out how to make money on stocks that performed poorly, short sellers. They had gotten in tight with tesla and made money when they lost money. I would not like it if someone profited off of my loss, neither did he. This one statement messed those guys up bad. Elon took away their secret santa. Im almost positive he very carefully thought this out, and figured out how to stop people from making money off him losing.

Short sellers gains do not necessarily reflect Tesla making money or not. Your view is very simplistic. Tesla is perhaps the most overvalued stock in the market. They can continue to do good, and the stock should still be cut in half.

Elon is mad because the stock price has to be 360 in March or they have to come up with a billion(yes billion with a b) in cash. This is going to be very difficult for them. With him removed as CEO, it might not even be possible.

People have laughed at me on here for claiming Tesla may not even be a company in a few years... i wasn't saying this without cause. Maybe someone will buy them if the valuation comes down to a normal number.

 

[Verge]

As a CEO, he should, and I guarantee you he did, know better. If the dude is having a breakdown, I can understand it, but I don't think the SEC will care.

Apparently there was a deal on the table, and Musk backed out at the last minute. SEC is pissed right now, they are looking for blood.

 

[theBrownLlama]

What if I tweeted that (say for the sake of argument that I actually have a twitter account)?

Does he get different treatment in front of the law because he's rich and famous?

he gets a diff treatment because he does not separate his ceo account from his personal thoughts.So it is indistinguishable on serious, market affecting matters like this.

if you are a multi millionaire ceo and owner of a large corp, you would be held to the same standard.

dude is not tweeting about how he likes his coffee afterall.

 

[theBrownLlama]

Apparently there was a deal on the table, and Musk backed out at the last minute. SEC is pissed right now, they are looking for blood.

then there would had been a material official releases by the company to the stock exchange and other regulatory institutions. Like, well, pretty much every company that has listed shares.

 

[Comixbooks]

Elon Musk is too damn high!!

 

[LostMF1]

Did Einstein for certain smoke weed? Regardless, I roll my eyes at marijuana defenders who point to this or that brilliant person who smoked, as if to imply that they were geniuses because of weed, not despite it. Marijuana did not give us E=mc2, I assure you.

For the record, I support marijuana's full legalization, but that doesn't mean I don't take a dim view of those who regularly smoke it outside of medical reasons. If you depend on marijuana to relax, have a good time, or to attain insights you're otherwise blind to, then that's a weakness.

Square!

 

[dgingeri]

The thing is with a fraud charge is that the prosecution has to prove an intent to defraud, which an irresponsible tweet from an eccentric inventor isn't likely to prove. I doubt they'll be able to convict. This is likely more of a political move.

 

[bluesynk]

Short sellers gains do not necessarily reflect Tesla making money or not. Your view is very simplistic. Tesla is perhaps the most overvalued stock in the market. They can continue to do good, and the stock should still be cut in half.

Elon is mad because the stock price has to be 360 in March or they have to come up with a billion(yes billion with a b) in cash. This is going to be very difficult for them. With him removed as CEO, it might not even be possible.

People have laughed at me on here for claiming Tesla may not even be a company in a few years... i wasn't saying this without cause. Maybe someone will buy them if the valuation comes down to a normal number.

Simplistic yes. Musk was concerned about the rumors these guys propagated, mostly around the 3 launch. He went on a few week bender complaining about short sellers. Then pulled this rabbit out of his hat, and it was no longer an issue. I don't think this happened without reason. not some joke, cold calculated business aimed in a specific direction

 

[Lith1um]

Elon should have run for Supreme Court instead.

 

[Atearen]

What's clearly intended as a joke on twitter, is now considered fraud. Really?

As uncle Ben said

"With great power comes great responsibility"

He's a big boy, what is effectively false information made a lot of people lost thousand or maybe millions of dollars the game must be fair for all players, no matter if the investor is short or long.

It's almost like they want to take down a visionary for any reason possible because he's threatening big oil or some monopoly.

You went full illuminati with that one, again, being considered as "visionary" does not mean you must be treated like a special little snowflake, coolness and humanitarian intentions are completely irrelevant to the analysis, all companies follow the same rules and must face the same consequences for breaking them.

People get way too emotional with this guy

 

[Wierdo]

Interesting timing, right before the big Q3 announcement. I wonder if some big wigs are happy to see the stock dip right before the quarterly so they can buy low, the results are expected to be pretty positive.

Could even be the Saudis playing him then backing out to buy Lucid stock instead, wonder if they'll swoop down to swallow Tesla shares on the cheap. Would be a smart move, they got the money to ride this future industry, estimated at over 10 trillion dollars, buy themselves a ticket out of oil dependency.

Sounds like a great time to buy either way.

Interestingly, he was apparently offered a no-guilty plea deal by the SEC but stuck to his guns and decided to fight his case instead, risky move:
https://www.teslarati.com/tesla-historic-q3-elon-musk-stands-ground-sec-lawsuit/

 

[katanaD]

As uncle Ben said

"With great power comes great responsibility"

aye.. which is why him accusing that one diving dude of being a pedophile was a bit odd to me. unless of course he has actual proof.

 

[M76]

No, different rules apply to you because you're not the CEO of a publicly traded company and he is (or are you... the plot thickens ) Posting something on twitter is still broadcasting it to the public, even if you haven't got a single follower. It so happens that Musk has 22.7 million people subscribed to his tweets, which is why I was pointing out the absurdity of your "offhand comment in a small crowd" comparison. A better comparison would be an "offhand comment" into the PA system during the Olympics (or any other internationally televised event.)

If Musk had even a modicum of common sense he'd have removed himself from twitter a LONG time ago - so far he's managed to get himself charged with fraud by the SEC, he's catching flak from the national labor relations board for his tweet about unions, and he's being sued for libel by the cave diver guy. What's next? Will he start tweeting bomb-threats?

I used "small crowd" exactly because the number of people doesn't make a difference in legal terms. A statement on a personal social media account can't be interpreted differently based on the number of followers the account has. A PA system or broadcast is not your private medium, you can't use it to share your feelings, opinions and wild ideas.

Of course a CEO has to be responsible for not posting stupid shit about the company he's running. But it's hardly criminal. If his investors or board of directors would give him heat for it, that would be understandable. But this a government agency going on a witch hunt.

 

[Verge]

Interesting timing, right before the big Q3 announcement. I wonder if some big wigs are happy to see the stock dip right before the quarterly so they can buy low, the results are expected to be pretty positive.

Could even be the Saudis playing him then backing out to buy Lucid stock instead, wonder if they'll swoop down to swallow Tesla shares on the cheap. Would be a smart move, they got the money to ride this future industry, estimated at over 10 trillion dollars, buy themselves a ticket out of oil dependency.

Sounds like a great time to buy either way.

Interestingly, he was apparently offered a no-guilty plea deal by the SEC but stuck to his guns and decided to fight his case instead, risky move:
https://www.teslarati.com/tesla-historic-q3-elon-musk-stands-ground-sec-lawsuit/

I'd love to hear the math you used to justify calling this stock "cheap?"

 

[Verge]

But it's hardly criminal. If his investors or board of directors would give him heat for it, that would be understandable. But this a government agency going on a witch hunt.

It's illegal to do this, and with very good reason.

 

[PaulP]

More proof that even brilliant people can do dumb things.

 

[M76]

It's illegal to do this, and with very good reason.

Illegal to do what? Make unsubstantiated claims to the public? A lot of people should be in jail then.

The whole lawsuit is a joke. If it was illegal they wouldn't go after him with this shit not worthy of being written on a handkerchief. They'd raise criminal charges.

 

[capt_cope]

I used "small crowd" exactly because the number of people doesn't make a difference in legal terms. A statement on a personal social media account can't be interpreted differently based on the number of followers the account has. A PA system or broadcast is not your private medium, you can't use it to share your feelings, opinions and wild ideas.

Of course a CEO has to be responsible for not posting stupid shit about the company he's running. But it's hardly criminal. If his investors or board of directors would give him heat for it, that would be understandable. But this a government agency going on a witch hunt.

I'm not sure if you're just trolling or if you're really this ignorant. It's absolutely against the law to mislead shareholders, and unless he's got some proof to back up his claim of "Funding secured" he's going to lose.

Illegal to do what? Make unsubstantiated claims to the public? A lot of people should be in jail then.

The whole lawsuit is a joke. If it was illegal they wouldn't go after him with this shit not worthy of being written on a handkerchief. They'd raise criminal charges.

Let me help: Read this - especially part B

The thing is with a fraud charge is that the prosecution has to prove an intent to defraud, which an irresponsible tweet from an eccentric inventor isn't likely to prove. I doubt they'll be able to convict. This is likely more of a political move.

Here's a nice article on the subject:

A plaintiff pursuing a Section 10(b) claim must demonstrate that the defendant acted with scienter, or the intent to deceive, manipulate or defraud. Although negligent conduct is insufficient to create liability, reckless conduct may satisfy this requirement, and the necessary degree of recklessness varies by Circuit. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 319 & n.3 (2007).

Even if they struggle to prove Musk intended to deceive or manipulate (and really I don't think proving that is too large a stretch,) announcing that you're going to be taking your company private and stating you've got funding secured BEFORE you've got an agreement (or even discussed financials) is pretty much the definition of reckless.

 

[MickeyBailey]

Amazes me people still defend this POS. He should have been brought up on charges for misleading investors 2+ years ago.

 

[M76]

I'm not sure if you're just trolling or if you're really this ignorant. It's absolutely against the law to mislead shareholders, and unless he's got some proof to back up his claim of "Funding secured" he's going to lose.


Let me help: Read this - especially part B

The question still remains Why is the SEC involved? If the shareholders were really mislead they should bring the suit. Or if he did really break the law this is not supposed to be a civil lawsuit but a criminal case, right?
Being snarky won't make me go away.

 

[LightsOut41]

What's clearly intended as a joke on twitter, is now considered fraud

I find it hilarious and sad a 9 word tweet is fraud now.

Musk made multiple follow-up tweets throughout the day after the initial tweet. It did not sound like he was joking whatsoever.

Edit to add his following tweets: "Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote."

"Shareholders could either to sell at 420 or hold shares & go private"

 

[Joust]

To call the whole Elon Musk controversy “Elon-Gate” seems like a bit of a stretch.

...
..
.
...when you get it...

 

[Wierdo]

I'd love to hear the math you used to justify calling this stock "cheap?"

All relative I guess.

If, like the Saudis, Chinese, Norwegan, and Scottish wealth fund managers your internal research and longterm outlook - I know, a foreign concept - shows great odds that the industry is moving in a disruptively positive direction, then you would capitalize on this short-term dip and increase your stake.

But if you're Bob Klutz, then the market for faster gas horses and clean coal unicorns is where the bet should be placed in order for America to stay relevant against all odds somehow.

In the end it's a gamble, especially when it's to the backdrop of a struggle between old and new industries and the upper caste politics involved.

What can I say, I'm betting in favor of America's longterm success.

 

[hawkeye_wx]

Interestingly, he was apparently offered a no-guilty plea deal by the SEC but stuck to his guns and decided to fight his case instead, risky move:
https://www.teslarati.com/tesla-historic-q3-elon-musk-stands-ground-sec-lawsuit/

The guys on CNBC this morning were shocked that anyone would turn down the offered deal.

 

[WBurchnall]

Are you kidding me?

No, I'm not kidding you.

He’s the CEO of a publicly traded company a clearly violated SEC rules.

The no jokes aloud on Twitter law of 1998?

A lot of people traded the stock based on that information, and financial analysts speculated for a while after the tweet over whether or not it was true. It was all over the financial news. A lot of people would have lost money as a direct result of this. There was no indication anywhere of “lol, jk” within the tweet, and even if there was, he’s a CEO of a major publicly traded company and should probably act like one when he’s in public.

So basically, what you are saying is, automatic trading screwed people over because THEY decided to invest their money with a MACHINE that doesn't understand HUMOR. So Elon Musk should be held responsible for a MACHINE'S ACTIONS because the machine was unable to understand humor. Furthermore, if any human beings, had no sense of humor and couldn't recognize a 420 joke (a joke that has been around for 4 decades... and so widely circles that even my parents and grandparents have probably heard of it), Elon Musk should be responsible for people not getting a joke or acting on a joke as if it were real.

So, as an example, if he tweets "A giant lizard made 400 foot tall by nuclear tests in the Nevada desert has just attacked Tesla's Headquarters. They are calling it Godzil-----ahhhhhhhhhhhhh" on April Fools and people trade based upon that joke thinking that a 400 foot tall lizard has actually attacked Telsa's HQs, Elon Musk should be held responsible, right? I mean, joking about Godzillllaaa atttacking is about as old of a joke as 420.

If the machine misinterprets it and automatically makes trades based upon it, is it Elon Musks fault or the fault of the people who decided, of their own free will, to put their money behind an automated trading machine, most of whom have no understanding how the algorithm inside really works?

Let's say you are sore because your automatic trading machine made trades based upon a joke. Did Elon Musk force you to invest your money with that automatic trading machine? Did he tweet out in favor of AIs and AIs being the future of humanity? (Hint: He tweeted the exact opposite and warned of this.) Did he give you insurance or a guarantee on your trading machine? endorse it? have anything to do with it? No, no, no and no? Gee, maybe you should be complaining to the makers of the Automated Trading Machine that made money trades based upon a joke and lost people money. They'll probably just tell you that misinterpretation of tweets, social media stories and newsfeeds is part of the risk, no covered and to move along.