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Fact Checking and Truth Squading media articles on Tesla

Discussion in 'Tesla Motors' started by bhzmark, Jul 7, 2016.

  1. bhzmark

    bhzmark Active Member

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    Let's use this thread to collect fact-checking and truth-squading and general debunking and constructive criticism of articles on Tesla, and even, to be fair, Tesla Motor's own blog posts and Elon's tweets, if you are so inclined.

    Especially good would be to find a prominent article or post that contains falsehoods, inaccuracies, or material omissions and then cite the real facts with links and citations to primary authoritative sources. The standard for the thread is: no opinions and no imagination -- only facts and evidence and authoritative sources.
     
  2. bhzmark

    bhzmark Active Member

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    Here is a first go at it:

    Fortune article by Carol Loomis July 5, 2016 Elon Musk Says Autopilot Death 'Not Material' to Tesla Shareholders

    Loomis states: "Tesla and Musk did not disclose the very material fact that a man had died while using an auto-pilot technology that Tesla had marketed vigorously as safe and important to its customers."

    Loomis claims that it was "material" she doesn't cite a source for this legal conclusion. She just states it as fact, indeed as worthy of the adjective "very" material.

    The only support for the claim that is was material is the fleeting day trading drop in the stock, from which it more than fully recovered. Indeed when the markets fully digested the information, the stock price more than fully recovered that day and still remains.

    Loomis realizes this and states blandly: "That the fact was indeed “material” can be at least mildly suggested by the immediate fall in Tesla’s stock price on Friday morning. In a market that was then generally rising, Tesla stock dropped from Thursday’s close of $212 to a low of $206. But then the market reversed itself. By the end of the trading day, the stock had climbed above $216."

    Not recognizing that she just undermined her own argument that it was material.

    When a stock price drops in response to disclosed news, that is one indication that the information is material -- but the fact that it dropped for w few hours, and then fully recovered and remain recovered while the news was digested directly contradicts any suggestion that stock price actions indicates materiality.

    But a stock price drop itself doesn't indicate materiality or not (however it does create a basis for damages). The true materiality standard is different:

    Actually she is not only wrong about how to use stock price drops, she is also wrong on the law on what is material or not. The fraud rules under Section 17(a) of the Securities Act and Rule 10-b(5) under the Exchange Act have been interpreted to include making material misstatements, including material omissions. “An omitted fact is material if there is a substantial likelihood that a reasonable [investor] would consider it important in deciding [to make the investment]. TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976).

    What are the facts of the accident? The police report stated The police report, which was made after interviewing witnesses (something Loomis never bothered to do), 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. Does Loomis 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? 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 getting to the bottom of it, when the stock has and remains up since the news, thereby undermining any claim for damages.

    Because very importantly the lack of stock price drop makes it impossible for a plaintiff to claim damages for a 10b5 material omission violation.
    "[T]o establish loss causation, “a plaintiff must allege ...that the subject of the fraudulent statement or omission was the cause of the actual loss suffered,”.... i.e., that the misstatement or omission concealed something from the market that, when disclosed, negatively affected the value of the security. Otherwise, the loss in question was not foreseeable." Lentell v. Merrill Lynch & Co. 396 F.3d 161 (2d Cir.), cert. denied, 546 U.S. 935 (2005).
    and see Jonathan Eisenberg, Beyond the Basics: Seventy-Five Defenses Securities Litigators Need to Know, 62 Bus. Law. 1281, 1338 (2007)

    Loomis made statements alleging securities laws violations and she gets both the standard of materiality wrong, and the basis for damages wrong. You'd think Fortune magazine would have someone on staff who could help her with basic securities law 101 before going to print.
     
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  3. bhzmark

    bhzmark Active Member

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    Kudos to Fortune for publishing Tesla's response. Read Tesla’s Full Response to ‘Fortune’

    But even in this response, they again get it wrong.

    They write " A follow-up article reported that Tesla itself stated in a financial filling just days after the accident that an injury or death involving its autopilot feature and the resulting liability claim against the company would have a “material adverse effect on our brand, business, prospects and operating results.”"

    That's not actually what the follow up article said. What it said was: "a crash related to Tesla’s autopilot feature was material, before it wasn’t." Tesla Said an Autopilot Crash Would Be 'Material' Before CEO Elon Musk Said It Wasn't

    But both the original statement, and even the revised statement are false. What Tesla actually said in its SEC filing was simply about product liability claims and not about accidents, and especially not about accidents where the preliminary police report is that a cause of the accident was a truck failing to yield the right of way and turning directly in front of the oncoming driver.

    What the original SEC filing said was:

    "We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.

    "Product liability claims could harm our business, prospects, operating results and financial condition. The automobile industry experiences significant product liability claims and we face inherent risk of exposure to claims in the event our vehicles do not perform as expected resulting in personal injury or death. We also may face similar claims related to any misuse or failures of new technologies that we are pioneering, including autopilot in our vehicles and our Tesla Energy products. A successful product liability claim against us with respect to any aspect of our products could require us to pay a substantial monetary award. Our risks in this area are particularly pronounced given the limited number of vehicles and energy storage products delivered to date and limited field experience of our products. Moreover, a product liability claim could generate substantial negative publicity about our products and business and would have material adverse effect on our brand, business, prospects and operating results. We self-insure against the risk of product liability claims, meaning that any product liability claims will have to be paid from company funds, not by insurance."

    Tesla's SEC filing did not say "a crash related to autopilot feature was material"

    And it didn't say (as the Orwellian revision in Fortune's follow up article states) "an injury or death involving its autopilot feature and the resulting liability claim against the company would have a “material adverse effect on our brand, business, prospects and operating results.”"

    Orwellian Fortune follow up article misdescribes the original article -- adding the concept of product liability which was not in the original article, and even still doesn't describe the SEC filing which used a "could" as a premise to the later "would."

    Fortune just keeps spinning more lies and inaccuracies and demonstrating an ignorance of law and command of English language.
     
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  4. Jlwine

    Jlwine Member

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    I cannot understand why so many in the media are seemingly just waiting for the "shoe to drop" on Tesla. Every single accident or event has become headline news! Nearly, 3,300 people die every day in the US because of auto accidents. Road Crash Statistics that don't make national news.
    I get why the Florida tragedy was news worthy. If was a spectacular crash that perhaps involved new technology. Even more so because the driver had previously posted highly viewed videos demonstrating the effectiveness of that same technolgy.
    But now every single accident involving a Tesla is headline news! Why?
    CBS this morning reported that (paraphrasing) "Tesla has problems with their own math as they failed to deliver as many cars in the second quarter as they had projected." Leaving out the fact that both orders and productions were up dramatically.
    As was pointed out in another thread, a very talented young actor Anton Yelchin was killed in his own driveway by his own Jeep! Although that made news, mostly for his tragic lost--very little on the design issue that lead to the Jeep recall. I can't imagine the media's attention if had been killed by a Tesla.
     
  5. Snerruc

    Snerruc Member

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    Not true. Approx 36,000 people die most YEARS in the US. 3300 per day would be over 12,000,000 per year. If we want the media to keep their facts straight perhaps we should do the same.
     
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  6. AndreN

    AndreN Member

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  7. FlatSix911

    FlatSix911 918 Hybrid

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    Incorrect ... :rolleyes:
    Annual Global Road Crash Statistics: 1.3 million people die in road crashes each year, on average 3,287 deaths a day.
    Annual United States Road Crash Statistics: 37,000 people die in road crashes each year, over 3,083 deaths per month.
     
  8. bhzmark

    bhzmark Active Member

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    so there is. hmm. I don't like investor discussions, and I like my thread title better, it otherwise is substantial overlap. I defer to mods to move my analysis there or keep this going as strictly fact checking location without investor discussion.
     
  9. JRP3

    JRP3 Hyperactive Member

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    As I posted elsewhere, is there any need to "disclose" what is already public information? The accident was reported by public authorities, i.e. the police, and records of the accident are publicly available to anyone, and likely published in local new papers soon after the accident occurred.
     

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