Musk: ‘I Do Not Respect the SEC’

Tesla Chief Executive Elon Musk continues to beef with the Securities and Exchange Commission. His latest shot at the government agency responsible for enforcing federal securities laws came in a 60 Minutes interview that aired Sunday.

“I want to be clear, I do not respect the SEC,” Musk said in the interview when pressed on compliance with a recent settlement with the agency.

Musk settled an SEC complaint in September related to an August 7, 2018 tweet that said he could take Tesla private at $420 per share — a substantial premium to its trading price at the time — and that funding for the transaction had been secured.

The SEC’s complaint alleged that, in truth, Musk knew that the potential transaction was uncertain and subject to numerous contingencies. Musk had not discussed specific deal terms, including price, with any potential financing partners, and his statements about the possible transaction lacked an adequate basis in fact. According to the SEC’s complaint, Musk’s misleading tweets caused Tesla’s stock price to jump by over six percent on August 7, and led to significant market disruption.

Under the terms of the settlement, Musk and Tesla have agreed to settle the charges against them without admitting or denying the SEC’s allegations. Among other relief, the settlements required that: Musk step down as Tesla’s Chairman and be replaced by an independent Chairman; Tesla will appoint a total of two new independent directors to its board; Tesla establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk’s communications; Musk and Tesla pay separate $20 million penalties.

Less than a week after striking the settlement, Musk tweeted a barb that the “Shortseller Enrichment Commission is doing incredible work.”

When asked in Sunday’s interview why he agreed to abide by the settlement, Musk said, “Because I have respect for the justice system.”

 

[markwj]

Musk: ‘I Do Not Respect the SEC’

Who does?

 

[Dan123]

As a CEO of a public company, Musk needs to stop making statement that may hurt the company. You may not respect the SEC, but they have a lot of power over you, and you should keep your opinions about them to yourself.

 

[Dan Detweiler]

As a CEO of a public company, Musk needs to stop making statement that may hurt the company. You may not respect the SEC, but they have a lot of power over you, and you should keep your opinions about them to yourself.

I would respectfully disagree in this case. The telling statement isn't that he doesn't respect the SEC, it's right after that when asked why he complied with the SEC agreement and stated that he respects the judicial system. That's the American way. Of course he doesn't agree with it and doesn't respect the SEC and the way they conduct business but he accepts the decision and will abide by it. Perfectly honest response.

Dan

 

[Brisket5652]

As a CEO of a public company, Musk needs to stop making statement that may hurt the company. You may not respect the SEC, but they have a lot of power over you, and you should keep your opinions about them to yourself.

And if no one "fights" then nothing will change and the government will increase it's power more and more.

As a 30 year financial advisor and trainer of financial advisors, my view is - he's correct.

I wish I could give specific but I'll say this...

The SEC is not "for" the customer. They are a government agency and as such have no "product" to voluntarily "sell" to the public so they need to raise money. In addition to funding from taxes their largest revenue source is fines.

To do this effectively they have arcane regulations to "catch" people so they can fine them (like speeding tickets do).

Guess who gets the money from the fine? SEC

Guess who doesn't get the money? The supposed affected client (but 99% of fines are dished out for violations that never affect a human being - they're bureaucratic in nature).

Now, in Elon's case.... Do you think the people who were "negatively" affected by his tweets are seeing any of the fine money? No. (Not that I think they should, for different reasons.) But from the perspective of the SEC of "consumer protection", why aren't they? Because it's not saving the public. It's about finding opportunities to collect fines.

 

[75Shappyt]

you are so right!! (mptpro), I have been telling people that for years, and they are so scared of news people, who use the public air waves, to suit themselves, why do you think they were telling people to go short on Tesla, and they do it right in the face of the SEC, and they do nothing, they are just plain scared. Elon was right!!

 

[suwaneedad]

I literally shouted for joy when Elon said this, partnered with his subsequent comment about respect for the judicial system.
I worked with the SEC for ~20 years and cannot possibly say enough bad things about that organization. It is an anachronistic, heavy-handed wielder of Government Power. I applaud Elon for his bravery and honesty. The government has big, big reasons to fear citizens with enough wealth to speak freely about the inanity of said government. In that respect, Elon ought to expect IRS audits annually for the rest of his life...they're coming for his money at this point.

 

[davecolene0606]

Why is the headline not:

I RESPECT THE JUSTICE SYSTEM

What is wrong with you people!!?

Fire Away!

 

[75Shappyt]

your right!! (suwaneedad), that's how they work, they always go after people that stand up to them, try to scare them take money from them, try to make there lives hard, and they are so scared to be exposed for what they really are. They are just out for themselves.

 

[Dan123]

And if no one "fights" then nothing will change and the government will increase it's power more and more.

As a 30 year financial advisor and trainer of financial advisors, my view is - he's correct.

I wish I could give specific but I'll say this...

The SEC is not "for" the customer. They are a government agency and as such have no "product" to voluntarily "sell" to the public so they need to raise money. In addition to funding from taxes their largest revenue source is fines.

To do this effectively they have arcane regulations to "catch" people so they can fine them (like speeding tickets do).

Guess who gets the money from the fine? SEC

Guess who doesn't get the money? The supposed affected client (but 99% of fines are dished out for violations that never affect a human being - they're bureaucratic in nature).

Now, in Elon's case.... Do you think the people who were "negatively" affected by his tweets are seeing any of the fine money? No. (Not that I think they should, for different reasons.) But from the perspective of the SEC of "consumer protection", why aren't they? Because it's not saving the public. It's about finding opportunities to collect fines.

As a CEO of a public company, his job is not to reform SEC or our government. His job is to make the company successful. I sympathize with his sentiment, and would probably agree with it, but that doesn't mean that I support his, at times impulsive and irresponsible, behavior. He needs to be more disciplined about his messages.

 

[Dan Detweiler]

As a CEO of a public company, his job is not to reform SEC or our government. His job is to make the company successful. I sympathize with his sentiment, and would probably agree with it, but that doesn't mean that I support his, at times impulsive and irresponsible, behavior. He needs to be more disciplined about his messages.

As a CEO it is his job to defend his company against defamation, lies, and deceit that adversely effect the shareholders too. The SEC is clearly not doing this. He is publicly calling out those that mislead, lie and spread false rumor regarding his company. In response to this he has been subjected to the constant wrath of the media, short sellers and those that seek to profit from sensationalizing the truth and actively seek the ultimate failure of the company. His motives and character are constantly under fire. At what point do you think he is justified to defend himself and his company? Never? If we had a few more CEOs like Elon perhaps there wouldn't be so much unsubstantiated, unverified, vitriol in the "news media".

Dan

 

[Electroman]

As a CEO it is his job to defend his company against defamation, lies, and deceit that adversely effect the shareholders too. The SEC is clearly not doing this. He is publicly calling out those that mislead, lie and spread false rumor regarding his company. In response to this he has been subjected to the constant wrath of the media, short sellers and those that seek to profit from sensationalizing the truth and actively seek the ultimate failure of the company. His motives and character are constantly under fire. At what point do you think he is justified to defend himself and his company? Never? If we had a few more CEOs like Elon perhaps there wouldn't be so much unsubstantiated, unverified, vitriol in the "news media".

Dan

That is why Musk quite rightly believes SEC uses its power to protect the short sellers and not the people who actually run a company and employees thousands.

 

[bhzmark]

And if no one "fights" then nothing will change and the government will increase it's power more and more.

As a 30 year financial advisor and trainer of financial advisors, my view is - he's correct.

I wish I could give specific but I'll say this...

The SEC is not "for" the customer. They are a government agency and as such have no "product" to voluntarily "sell" to the public so they need to raise money. In addition to funding from taxes their largest revenue source is fines.

To do this effectively they have arcane regulations to "catch" people so they can fine them (like speeding tickets do).

Guess who gets the money from the fine? SEC

Guess who doesn't get the money? The supposed affected client (but 99% of fines are dished out for violations that never affect a human being - they're bureaucratic in nature).

Now, in Elon's case.... Do you think the people who were "negatively" affected by his tweets are seeing any of the fine money? No. (Not that I think they should, for different reasons.) But from the perspective of the SEC of "consumer protection", why aren't they? Because it's not saving the public. It's about finding opportunities to collect fines.

read the settlement it answers your question. Part of the money will be used to compensate "investors" (in this case short sellers) who shorted and then covered at the higher price resulting from the tweet. For complicated reasons it is wrong to compensate them (namely the tweet arguably wasn't materially misleading), but the SEC doesn't fine people to raise its own money. They can't keep it anyway -- if any stays with the US it goes in the Treasury to still pay off one day of the war in Iraq -- a drop in the bucket.

But he was right to not respect the SEC -- they were wrong to file and they likely would have lost but the nuisance value (i.e., cost of the cloud hanging) made it worth settling.

 

[75Shappyt]

you guys are right on, you got it (Dan), If there were more CEO'S like Elon, maybe our representatives will take a look at the SEC, and do something about it, if there not to scare to do so. Maybe that's the problem. When you can have news media using the public air ways to suit themselves right in the face of the SEC and they do nothing about it, looks like the SEC is worried about being exposed, and not going after the media, it's not left unnoticed how they want the market to go, I wonder how much money media makes using the public air ways. I think the SEC is scared of the Media, doesn't want to risk being exposed.

Go Elon!!

 

[Brando]

As a CEO of a public company, Musk needs to stop making statement that may hurt the company. You may not respect the SEC, but they have a lot of power over you, and you should keep your opinions about them to yourself.

YES Sir. Just follow orders. And keep your mouth shut.

Free speech, ideas, debate - go move to the land of the free and home of the brave if you want that.

PS - don't hurt the company by building things no other dare to build. Especially not in the most expensive place in the US. Mexico or China - GM is leading the way. /Sarcasm

 

[Dan123]

YES Sir. Just follow orders. And keep your mouth shut.

Free speech, ideas, debate - go move to the land of the free and home of the brave if you want that.

PS - don't hurt the company by building things no other dares to build. Especially not in the most expensive place in the US. Mexico ot China - GM is leading the way. /Sarcasm

Free speech has nothing to do with his job duties. If I start exercising my free speech right at my work place, then very soon I will be exercising them in a line for unemployed people. When you take on a job like the CEO, it comes with responsibilities. Which includes making peace with powerful governmental agencies that have the power to cut off your sources of financing in a split second.

 

[Brando]

As a CEO of a public company, his job is not to reform SEC or our government. His job is to make the company successful. I sympathize with his sentiment, and would probably agree with it, but that doesn't mean that I support his, at times impulsive and irresponsible, behavior. He needs to be more disciplined about his messages.

Sell your Tesla stock. Vote with your wallet.

Seen what Elon has done in 15 years and you dare suggest he is impulsive, irresponsible, lacks discipline??

 

[Brisket5652]

read the settlement it answers your question. Part of the money will be used to compensate "investors" (in this case short sellers) who shorted and then covered at the higher price resulting from the tweet. For complicated reasons it is wrong to compensate them (namely the tweet arguably wasn't materially misleading), but the SEC doesn't fine people to raise its own money. They can't keep it anyway -- if any stays with the US it goes in the Treasury to still pay off one day of the war in Iraq -- a drop in the bucket.

But he was right to not respect the SEC -- they were wrong to file and they likely would have lost but the nuisance value (i.e., cost of the cloud hanging) made it worth settling.

The SEC may not technically "keep" the fines in their own coffers, but the money does not generally go to the "victims" (because often they're aren't any) nor to the tax payer. Perhaps because this situation is so public they have to manufactor "victims", but this is not typical

Finra, as another poster commented, is in some ways worse .

 

[Brisket5652]

Free speech has nothing to do with his job duties. If I start exercising my free speech right at my work place, then very soon I will be exercising them in a line for unemployed people. When you take on a job like the CEO, it comes with responsibilities. Which includes making peace with powerful governmental agencies that have the power to cut off your sources of financing in a split second.

I don't completely disagree with you, however we also need people too stand up to Big Brother, or nothing will change .As a German I can attest to that.

 

[Brisket5652]

As a CEO of a public company, his job is not to reform SEC or our government. His job is to make the company successful. I sympathize with his sentiment, and would probably agree with it, but that doesn't mean that I support his, at times impulsive and irresponsible, behavior. He needs to be more disciplined about his messages.

That is true, but not the whole truth. He isn't just a CEO. He has other ambitions.

If he was a traditional CEO focused only on the profitability of a given company he probably wouldn't have started Tesla or SpaceX, instead retire or staye PayPal.

the same drive that makes him build a company to change the world is what makes him stand up against big brother like the SEC.

If you're a Tesla shareholder, that's what you signed up for

By the way, this is not untypical for a CEOs or companies to do the same thing. Often times take stances that are not best for the shareholders, but better for the country at large or their customers or even the general public. Apple didnt acquiese to the government, Google has done the same thing, etc.