Another Model X crash, driver says autopilot was engaged

[msnow]

Before you comment on what is material, please do just a little bit of research on the subject -- it really doesn't take too much effort:

Within the context of corporate and securities law in the United States, a fact is defined as material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote their shares or invest their money. In this regard, it is similar to the accounting term of the same name.

Materiality is particularly important in the context of securities law, because under the Securities Exchange Act of 1934, a company can be held civilly or criminally liable for false, misleading, or omitted statements of fact in proxy statements and other documents, if the fact in question is found by the court to have been material pursuant to Rule 10b-5.

Do you really believe there is a substantial likelihood that this issue is important in deciding how a shareholder would vote or invest their money? If so, what has happened to the share price since the investigation was first announced? Has it ebbed and flowed as usual or did it lose a quarter of its market value -- like what happens with a real material fact that is important in deciding how shareholders vote their shares or invest their money?

The test for what is material is not -- "so many people are talking about it" ... sheesh!



Thanks for the link but the article tells us nothing. It says:

"A source close to Tesla Motors, on the condition of anonymity, has confirmed that Tesla Autopilot 2.0 is coming soon."

Please, tell us something we don't know, like what "coming soon" means!

Oh wait, it does:

"I have my fingers crossed the Model 3 will ship with Autopilot 2.0."

So "coming soon" means late 2017, "fingers crossed"!

@Eclectic is a securities lawyer so he can defend himself are you also an attorney in this field?
Re: materiality; I am a shareholder and I absolutely would want to know if there was a fatality understanding the media sh1tstorm that would ensue. That doesn't mean I would have dumped all my stock because of this incident (I've been long on TSLA for many years) but I expect transparency from a publicly traded company. Time will tell how other shareholders and the SEC feel about it, hopefully they will continue to give a growing company some slack.

 

[Cosmacelf]

Well, it's not me who claimed that AP would save 500,000 lives. Musk wrote the following:

“Indeed, if anyone bothered to do the math (obviously, you did not) they would realize that of the over 1M auto deaths per year worldwide, approximately half a million people would have been saved if the Tesla autopilot was universally available. Please, take 5 mins and do the bloody math before you write an article that misleads the public.”

The whole of the European Union + the US + Japan don't have a total of 100,000 traffic deaths p.a. Therefore, even if the AP pevented each and every road death in the First World you would fall massively short of his claim. His claim is bunkum, BS at first sight, no need to do the maths. (BTW, even as a non native speaker I know that "maths" is the common usage in almost all of the English speaking world outside of the US and Canada. Perhaps like you Musk doesn't and that's why his figures don't add up?)

Where did Musk write that? I"m not disputing he did, just would like a link to it.

 

[Canuck]

@Eclectic is a securities lawyer so he can defend himself are you also an attorney in this field?

Even the best lawyers in their fields are wrong on occasion. In fact, in every case that is determined at trial there is a lawyer who lost on his arguments (well, unless there is an unrepresented party). So please deal with the issues rather than cite qualifications. You can't go into court and say "I am a securities lawyer" as authority for your argument -- so why try that here?

Besides, if he can defend himself, then why are you attacking my qualifications and citing his?

That doesn't mean I would have dumped all my stock because of this incident

Thank you for proving my point. I doubt any VW shareholder would have said that.

Where did Musk write that? I"m not disputing he did, just would like a link to it.

Elon Musk Says Autopilot Death 'Not Material' to Tesla Shareholders

 

[Eclectic]

Even the best lawyers in their fields are wrong on occasion. In fact, in every case that is determined at trial there is a lawyer who lost on his arguments (well, unless there is an unrepresented party). So please deal with the issues rather than cite qualifications. You can't go into court and say "I am a securities lawyer" as authority for your argument -- so why try that here?

Besides, if he can defend himself, then why are you attacking my qualifications and citing his?



Thank you for proving my point. I doubt any VW shareholder would have said that.



Elon Musk Says Autopilot Death 'Not Material' to Tesla Shareholders

All I can say is that you obtained your definition from Wikipedia. I obtained mine from 3 years of law school followed by 20 years practicing in the field of securities law, dealing with the SEC on this very question on a regular basis.

 

[Garlan Garner]

Agree--one thing I will miss in my 535i to Model X migration is my HUD!

HUD is the worst thing EVER. It does not work in the sunlight and its a constant distraction.

 

[msnow]

Even the best lawyers in their fields are wrong on occasion. In fact, in every case that is determined at trial there is a lawyer who lost on his arguments (well, unless there is an unrepresented party). So please deal with the issues rather than cite qualifications. You can't go into court and say "I am a securities lawyer" as authority for your argument -- so why try that here?

Besides, if he can defend himself, then why are you attacking my qualifications and citing his?



Thank you for proving my point. I doubt any VW shareholder would have said that.



Elon Musk Says Autopilot Death 'Not Material' to Tesla Shareholders

Take it easy, I'm not attacking you or your qualifications (I don't even know what your expertise on this is). The reason why I brought up his credentials was precisely because he's an expert in the field (and yes U.S. Courts recognize credentialed subject matter expertise in testimony so what he says has weight). More importantly his opinion exactly mapped to my own professional experience in dealing with SEC filings. Lawyers are the ones who certify the verbiage and yes they are sometimes overly cautious and inclusive w/r/t materiality but that's because there are serious ramifications for doing otherwise and they have a fiduciary responsibility in this regard. That is a good thing.
I didn't prove your point by saying I wouldn't have dumped my TSLA shares even if this had been disclosed because I got in at $21 so no amount of bad news would cause me to do that. Others have different circumstances and have a right to know about a material fact. Ultimately it's up to others to decide on this.

 

[ksquared]

HUD is the worst thing EVER. It does not work in the sunlight and its a constant distraction.

I have no idea what system you've used. Mine works perfectly in sunlight. And doesn't distract me at all. Used mostly for Nav directions and for the speedometer. My only issue with it is it disappears through polarized sunglasses, so I wear regular ones in the car.

 

[Garlan Garner]

I have no idea what system you've used. Mine works perfectly in sunlight. And doesn't distract me at all. Used mostly for Nav directions and for the speedometer. My only issue with it is it disappears through polarized sunglasses, so I wear regular ones in the car.

All of Toyotas HUD's appear to disappear when facing the sunlight .

 

[ksquared]

All of Toyotas HUD's appear to disappear when facing the sunlight .

Then perhaps you should have said Toyota's HUDs do not work in the sunlight and are the worst thing ever. I happen to like my BMW HUD and will miss it. Your comment is like saying you heard an awful car radio once, so "car radios are the worst thing EVER."

 

[msnow]

Where did Musk write that? I"m not disputing he did, just would like a link to it.

He wrote it in an email thread to the reporter of an article in Fortune Magazine last week.
Elon Musk Says Autopilot Death 'Not Material' to Tesla Shareholders

 

[Garlan Garner]

Then perhaps you should have said Toyota's HUDs do not work in the sunlight and are the worst thing ever. I happen to like my BMW HUD and will miss it. Your comment is like saying you heard an awful car radio once, so "car radios are the worst thing EVER."

You didn't ask where my comments came from. So I didn't provide them.

I have yet to see an HUD that is attractive as I have seen and experienced many. To me...they are distracting and unnecessary. The ones I have owned fogged up when the front windshield fogged up, they didn't work in direct sunlight and they were incredibly dim compared to dashboards. That's including the bmw HUD. Do I have a right to state my opinion? Answer = yes.

 

[ecarfan]

I mean it isn't as if the gas giants ever created things like safety belts, safety glass, anti-lock brakes, airbags, or any other features that have an impact on safety.

Almost all those things were mandated by governments and the car companies fought them tooth and nail, saying all kinds of nonsense.

Now we take those car safety features for granted.

 

[Aljohn]

The reason it remained disabled was to allow the sensors to calibrate, which per the manual can take anywhere from 30 minutes to several days depending on the driving conditions encountered during this time.

Thanks, I wasn't sure of the reason.

 

[brianman]

HUD is the worst thing EVER.

Disagree.

It does not work in the sunlight and its a constant distraction.

Remains to be seen.

 

[Garlan Garner]

Disagree.

Remains to be seen.

Disagree? Fine.
I've seen it. So it does not remain to be seen.

Hud unusable when window fogs or gets filmed up from smoking....I've seen it.

Anyway....that's my vote. Vote however you want.

 

[jgs]

Airplane autopilot can land planes and otherwise avoid crashing into terrain without human input.

Some airplane autopilots can. The GA autopilots I've seen in use absolutely cannot.

Also: I still don't think it would matter a tinker's dam if the name were misleading. Which it isn't.

 

[Drivin]

Almost all those things were mandated by governments and the car companies fought them tooth and nail, saying all kinds of nonsense.

Now we take those car safety features for granted.

Funny!
You think the government invented safety belts, seat belt tensioners, airbags, anti-lock brakes and then mandated them to be used?!
And you think that cars didn't have these features until they were required to? Wow, that is the funniest thing I have read in years. Ohh, the government is saving us!

(for the US, seat belts introduced in late 50s, mandated in the late 60s. airbags introduced in the 70s, mandated in the late 90s, antilock brakes introduced in the 70s, mandated in the 21st century, safety glass introduced in the 20s, ghosting glass introduced with the X, not sure when mandated).

yeah, it all happened because of government mandates. LOL.

It is useful to actually know what history is rather than knee-jerk response of "Big Old Mean Gas Companies are Bad"


But let's put this in context. For the US, airbags estimated to have saved 10k lives, seat belts saved 211k lives since 1975 - BUT Tesla AP will save 500k lives A YEAR! A. YEAR. So people can stop wearing seatbelts and maybe we can lighten up on the cost/need of airbags.

 

[bhzmark]

From a securities law standpoint, Tesla keeps digging itself a deeper hole. I just saw Tesla's response to Fortune and was shocked at how defensive and rash it was.

First, they have once again utterly mangled the definition of materiality for SEC filings. The test has never been how the market reacts on the day of a disclosure/failure to disclose. The test is a subjective one that takes into account a number of factors, most of which are not related to how the market reacts. This is securities law 101 and I suspect Tesla's PR department is ignoring the advice of counsel in sending out these releases. Even a first year attorney knows better than to try to claim that a market reaction is indicative of whether an undisclosed item is material.

Second, and worse, Tesla flat out calls its risk factors disclosure "boilerplate". Many years ago, the SEC gave specific guidance on risk factors and told companies to NOT use boilerplate. I still get SEC comments on filings that tell us to get rid of something that sounds like boilerplate and replace it with meaningful, specific language. This again points to a PR department sending out releases without running them past counsel. They basically told the SEC that their risk factors are worthless by calling them boilerplate.

If Tesla is trying to provoke the SEC into an investigation, they're doing a dang good job.

What do you think they were supposed to disclose in May after the accident?

What are the facts of the accident that they knew in May? The police report states:

“V01[truck] proceeded to make a left turn directly in front of V02[Tesla] as it was oncoming.”

The report also stated that the truck driver “Action at Time of Crash” was that he “Failed to Yield Right of Way”

A homicide case was opened. http://documents.latimes.com/tesla-accident-report/

That is what was known shortly after the accident.

Do you, like Carol Loomis in the Fortune article, think it is material to an investor making a decision in a Tesla security that:

Tesla driver was in an accident when a truck made "a left turn directly in front of the" vehicle thus failing to yield the right of way, and vehicular homicide charges were in the works?

Is that really material?

Those accidents happen all the time and it is laughable to think that they would be material, and further laughable to ominously wonder about plaintiff lawsuits (or SEC enforcement?! ha!) getting to the bottom of it, when the stock has and remains up since the news, thereby undermining any claim for damages.

What is this great securities law hole they are digging themselves into?

Yes I know you are a securities lawyer. But so is John Coffee and Fortune magazine dusted him off and he was giving them nonsense quotes too with total ignorance what Tesla actually knew at the time in May.

Under the law and what they knew at the time in May I don't see anything material.

What became material was all the false media circus nonsense. But that was all public anyway.

 

[calisnow]

Some airplane autopilots can. The GA autopilots I've seen in use absolutely cannot.

I'm a GA pilot and I concur - the use of the term "autopilot" by Tesla is, in my opinion, entirely consistent with the way GA pilots use autopilots. No pilot in his right mind would close his eyes and take a nap while his brand new $900,000 Cirrus SR22 single engine piston plane with the latest GA technology - flight director, latest autopilot - flew by itself.

Private/instrument rated single pilot cockpits use autopilots to ease the mental workload while we monitor systems. It may be the case that commercial pilots up in the flight levels (IE - very very high, above the weather systems) go to sleep while the copilot stays awake and listens to ATC.

But currently - "autopilot" as used by Tesla is a perfect metaphor. Even in the world of GA the very best autopilots still need a pilot to monitor them AND there are autopilots of varying degrees of capability flying around the skies - some do more than others. It isn't the case that Tesla needs Autopilot to become more advanced before it should be called "autopilot" - it's already far more intelligent and capable than many GA airplane autopilots.

 

[Canuck]

All I can say is that you obtained your definition from Wikipedia. I obtained mine from 3 years of law school followed by 20 years practicing in the field of securities law, dealing with the SEC on this very question on a regular basis.

That's all you can say? You've practiced securities law for 20 years and you can't provide us with a case (or law review article) the ratio of which supports your statement that:

The fact that so many people are talking about this, and that the government and others are talking about the need to look into more regulations for autonomous cars, and the uncertainty of how that may affect Tesla's sales, profits, market outlook, etc., all indicate that this is material information.

I've been practicing law for over 25 years albeit in the area of insurance defence and I find Wikipedia to provide a good summary of the law in my area of practice. In fact, the contributors are lawyers and professors in the field. In any event, I never cite my qualifications as support for a position without providing the facts and law in support in addition to my credentials. You are on record here saying that people talking about it is the criteria and test for materiality as set out above. I cited the Boston University Law Review, via Wikipedia:

A fact is defined as material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote their shares or invest their money. [4]

4. Reasonable Investor(s), Boston University Law Review, available at: Reasonable Investor(s) by Tom C. W. Lin :: SSRN

Time will tell who is right on this issue regarding materiality and Tesla. We're both on record here with our positions.

The reason why I brought up his credentials was precisely because he's an expert in the field (and yes U.S. Courts recognize credentialed subject matter expertise in testimony so what he says has weight).

I assume you're responding to what I said here:

You can't go into court and say "I am a securities lawyer" as authority for your argument -- so why try that here?

In fact, lawyers can't go into court and provide expert testimony on behalf of their clients. That's against the rules of evidence. Lawyers hire experts on behalf of their clients and when the lawyer presents an expert in court, you must qualify him/her as such and in doing so you cite credentials. Then the court decides whether the credentials are sufficient to qualify him/her as an expert and, if so, you turn to the contents of the expert report or testimony to be submitted, and then direct and cross-examine the expert on the issues in question.

*disclaimer -- all my posts are my personal opinions only and shall not be taken as legal or financial advice!