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.
Thank you for helping to clarify this. The best example I can give of why materiality isn't determined by the immediate stock market reaction to the disclosure of the omitted fact would be this...
Let's say that in a few months, the government completes its investigation into autopilot and orders Tesla to either hobble AP or utterly eliminate it (and either disable it on existing vehicles or buy back those vehicles). That obviously is going to have a VERY significant impact on Tesla's business and financial condition, and future outlook.
Right now, some people think that there is a good chance that the government will do something like this. Many people don't have such concerns. If you were one of those people with the concern, though, and you bought the stock in the May 18 offering,
Canuck - unless I missed the part of the discussion where eclectic took a nasty tone with you and you are now simply reacting by adopting the same tone in return (and I did go back and search the thread) then you're out of line with the way you're speaking. The substance of your argument is getting lost in the personal aggression. "That's all you can say?" is a statement which connotes inadequacy in your conversation partner. "You've practiced securities law for 20 years. . ." as well as what you said in your prior post implies professional incompetence.
Both statements are uncalled for, unbecoming of a professional - and mean. It's cruel to attempt to publicly humiliate someone else by implying incompetence.
Between the two of you, Eclectic seems to be the one who has enough self control to be able to dispassionately write what he thinks without getting personal about it.
I have no beef with Canuck. I believe that he or she missed my original post(s) where I set out the definition of materiality and instead has focused on a thing that I presented as EVIDENCE of materiality. Nowhere did I say that people talking about a fact is the definition of materiality. I put the Basic v. Levinson definition of materiality into layman's term in my original post(s).
This is for the edification of people interested in understanding the topic, rather than nitpicking...once you define a test, you have to show what facts can prove that the test has been met. And that's where I brought up the fact that there is so much public discussion of the event. To wit:
"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."
Had Canuck read what I wrote, carefully, he'd see that I wrote that the fact stated indicates that the test has been met
10b-5 cases are VERY fact and circumstance specific. The fact that the market moved a certain way is NEVER dispositive, because there a thousands of factors that move markets at any particular moment. It may be a piece of evidence, but it's very weak. However, if you're asking a jury whether something should be deemed material, and you show them facts that the investment community was heatedly discussing the fact that was not disclosed in a timely manner, that weighs heavily towards showing that it was a material fact.
It has nothing to do with whether there were damages suffered. That's a separate element of a 10b-5 claim. It may well be that no one suffered a damage. But first you must establish materiality of the omitted information, and I'm fairly confident that this was material information. The remedy may be that the SEC censures Tesla, disqualifies them from using certain (easier) filing techniques or requires new, more detailed disclosure in their risk factors.
And I think that is where Canuck got crossed up with my statements. He/she may have construed my discussion of materiality with the question of whether damages exist. I have not said a thing about the damages element of the claim.
