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SEC seeks to bar Elon Musk from being CEO of Tesla or any other publicly traded company.

nuckin_futz

By nuckin_futz
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nuckin_futz Canucks Franchise Player

nuckin_futz

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Regulators accuse Tesla's Elon Musk of securities fraud

  • 28 September 2018

 

The Securities and Exchange Commission has filed a lawsuit accusing Tesla boss Elon Musk of securities fraud.

The US financial regulator says Mr Musk's claims that he had secured funding to take the electric carmaker private were "false and misleading".

 

It is seeking to bar Mr Musk from acting as an officer or director of a publicly traded company.

 

Mr Musk called the action "unjustified" saying he acted in the "best interests of truth, transparency and investors".

 

"Integrity is the most important value in my life and the facts will show I never compromised this in any way," he said in a statement.

Tesla's board of directors said in a statement that they were "fully confident in Elon, his integrity and his leadership of the company".

 

Mr Musk startled the business world last month when he took to Twitter to announce that he was considering a plan that would de-list the company from the stock exchange.

 

He wrote he had "funding secured" for the proposal, which would value Tesla at $420 per share.

 

 

_103612176_grimes.jpg

Elon Musk with Grimes, the girlfriend he thought the number $420 - noted in marijuana culture - would amuse

 

The statements "created the misleading impression that taking Tesla private was subject only to Mr Musk choosing to do so and a shareholder vote", according to the SEC complaint, which was filed on Thursday in federal court in New York.

 

"In truth and in fact Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source," it said.

 

Marijuana culture

The SEC statement said that, according to Mr Musk, he calculated the $420 price per share based on a 20% premium over that day's closing share price because he thought 20% was a "standard premium" when taking companies private transactions.

 

This calculation resulted in a price of $419, and Mr Musk stated that he rounded the price up to $420 because he had recently learned about the number's significance in marijuana culture and thought his girlfriend, the Canadian indie singer Grimes, "would find it funny, which admittedly is not a great reason to pick a price".

 

The 7 August tweets took even people within the company by surprise.

 

"Was this text legit?" the firm's head of investor relations wrote to Mr Musk's chief of staff, the complaint says.

 

'Significant confusion'

Tesla shares soared after Mr Musk's announcement, before retreating amid questions and doubts.

Weeks later, Mr Musk backed away from the plan, citing investor feedback.

 

The SEC, which is also seeking financial penalties, said his claims created "significant confusion" in the stock market and harmed investors.

 

"Taking care to provide truthful and accurate information is among a CEO's most critical obligations," said Stephanie Avakian, co-director of the SEC's enforcement division.

 

"That standard applies with equal force when the communications are made via social media or another non-traditional form."

The SEC complaint sent shares of the firm down by more than 10% in after-hours trade.

Analysis

Dave Lee, BBC North America technology reporter, San Francisco:

 

Whatever the state of mind Elon Musk was in when he announced he had "funding secured", it could end up costing almost everything he holds dear. It would be nobody's fault but his own.

 

Wall Street veterans - and indeed, anyone with a modicum of knowledge of how the financial markets work - predicted this very scenario the moment those tweets were posted.

 

Mr Musk is famously an unconventional chief executive, but when it comes to the financial markets, you can't flout the rules without serious consequences.

 

It's clear, from emails contained in the SEC's filing, that staff at Tesla were caught completely off guard. His head of investor relations asked if the tweets were "legit".

 

The Nasdaq, confused, halted trading. It all makes Mr Musk unfit to run a public company, the SEC says.

 

All this because of a tweet sent because Mr Musk thought his girlfriend "would find it funny".

 

Mr Musk, who co-founded Tesla and has served as chief executive since 2008, is a divisive figure in the business world, who has inspired passionate fans and critics.

Supporters credit Mr Musk, also the head of the rocket company SpaceX, with pushing the car industry to produce electric cars.

 

But his critics - including many who have made investments predicting the firm's stock will fall - argue that Tesla has consistently lost money and struggled to increase its output, repeatedly missing its own targets.

 

The financial pressure facing Tesla has mounted this year, as it boosts spending to increase production of its newest car.

 

Erratic behaviour

In recent months, Mr Musk's own behaviour has also been in the spotlight.

 

In July, he drew widespread criticism after accusing a British cave diver involved in the rescue of Thai teenagers from a flooded cave of being a child abuser.

The diver later filed a defamation suit.

 

He also drew attention after an emotional interview with the New York Times, in which he said he worked "120-hour weeks" and took sedatives.

And earlier this month, he smoked marijuana live on the web during a podcast with comedian Joe Rogan.

 

https://www.bbc.com/news/business-45672813

 

************************************

 

I have rarely seen someone coasting on their prior reputation as much as this guy. The cult of personality around him is baffling. He's a total disaster. His company makes an awesome product but they cannot make any money selling them. Constantly missing targets, production delays, not to mention the company is a financial sinkhole. Which will soon have to undertake another massive capital raise.

 

And what was the point of going on Joe Rogan's show and smoking dope live on the internet? That's not exactly a good look for a major CEO.

 

giphy.gif

 

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nuckin_futz Canucks Franchise Player

nuckin_futz

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Elon Musk reportedly blew up a settlement with the SEC at the eleventh hour

  • Elon Musk had a settlement agreed with the Securities and Exchange Commission (SEC) but blew it up at the eleventh hour, The Wall Street Journal reports.
  • The SEC is suing Musk and seeking to bar him from being an officer or director at any public company.
  • The suit revolves around Musk's now infamous "funding secured" tweet in August when he toyed with the idea of taking Tesla private.
  •  

Elon Musk agreed on a settlement with the Securities and Exchange Commission (SEC), but walked away from the deal at the eleventh hour last week.

 

That's according to a report in The Wall Street Journal, which said the SEC was on the brink of filing the settlement, only for Musk to blow it up at the last minute.

 

CNBC reported on Friday that the proposed settlement would have barred Musk from being the chairman of Tesla's board of directors for two years, forced Tesla to add two new independent directors to the board, and required Musk and Tesla to pay a fine. Musk wouldn't accept the deal because he believed that doing so "would not be truthful to himself," according to CNBC.

 

That chain of events led to the SEC announcing on Thursday that it was suing Musk on charges he made "false and misleading statements" in tweets claiming he could take the company private.

 

The Journal said the SEC had "crafted" the settlement with Musk. It was preparing to file the agreement on Thursday last week, but then Musk's lawyers called to spike the deal. The SEC then hastily pulled together a lawsuit.

 

The SEC is suing the Tesla CEO for his now infamous "funding secured" tweet from August 7, which purported he was taking Tesla private at $420 a share. The SEC said Musk knew such a deal was never on the table. He announced on August 25 that Tesla would remain public.

 

In its claims for relief, the SEC recommended that Musk pay a penalty and that he be "prohibited from acting as an officer or director" of a public company.

 

Musk said he was "deeply saddened" by the lawsuit. In a statement, the Tesla CEO said: "The unjustified action from the SEC leaves me deeply saddened and disappointed. I have always taken action in the best interest of the truth, transparency and investors. Integrity is the most important value in my life and the facts show I have never compromised this in any way."

 

The SEC declined to comment when contacted by Business Insider. A Tesla spokeswoman said: "Tesla and the board of directors are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful US auto company in over a century. Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees."

 

The SEC lawsuit caused Tesla's stock to dip by as much as 11% in after-hours trading.

 

https://finance.yahoo.com/news/elon-musk-reportedly-blew-settlement-083757572.html

 

*******************************************

Musk was offered a sweetheart deal and threw it away. Now the SEC is going ballistic against him. I guess they didn't appreciate being double crossed. The relief they are seeking is way worse than what they had originally settled for.

 

The guy picks fights with everyone. What was the point of repeatedly calling one of the British rescuers of the Thai cave boys a pedophile? Just because he said Musk's mini submarine wouldn't work in that cave. Now that rescuer is suing Musk for defamation.

 

The guy fights with Wall Street analysts, fund managers, short sellers.

 

The guy is his own worst enemy.

 

Now he's picked a fight he cannot win, against the SEC.

 

Even the Air Force is pondering pulling contracts granted to Musk's other company SpaceX because he's a dope fiend.

 

Report: Air Force Not Sure What to Do About Elon Musk Smoking Weed

 

https://gizmodo.com/report-air-force-not-sure-about-what-to-do-about-elon-1828912865

 

 

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Twilight Sparkle Canucks Hall-of-Famer

Twilight Sparkle

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9 minutes ago, nuckin_futz said:

And what was  the point of going on Joe Rogan's show and smoking dope live on the internet? That's not exactly a good look for a major CEO.

 

giphy.gif

 

rogan is a cannabis advocate so why not :x

 

but when you have as much money as this guy does, you can do and say whatever you want. i bet when he dies hes not gonna leave a cent to his kids

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nuckin_futz Canucks Franchise Player

nuckin_futz

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7 minutes ago, Twilight Sparkle said:

rogan is a cannabis advocate so why not :x

 

but when you have as much money as this guy does, you can do and say whatever you want. i bet when he dies hes not gonna leave a cent to his kids

When they were smoking up they were in California where it's legal. It's just a terrible look for a CEO.

 

When you are the CEO of a publicly traded company you cannot do and say whatever you want. Hence the SEC action against him.

 

Musk has no children. Despite being married and divorced three times. Twice to the same woman.

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