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.”

 

[Brisket5652]

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.

Preach it, brother .

We need more "big players" to stand up to big brother such as mark Cuban and Elon.

 

[Dan123]

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??

I don't have any Tesla stock, as far as I know. I appreciate all that he has done, but he also made mistakes along the way, and I don't see any problems with discussing his mistakes.

 

[neroden]

Musk has a very clear point: the SEC has repeatedly failed to investigate blatant stock manipulation by short-sellers of TSLA.

 

[Eclectic]

Preach it, brother .

We need more "big players" to stand up to big brother such as mark Cuban and Elon.

I've also had to deal with the SEC for 20+ years, as a lawyer handling securities offerings and M&A. Like most government agencies, they are not worth the price paid. As one example, take a prospectus of offering circular. Lawyers read them, accountants might read the financial sections, and investors generally only scan through a few sections at a high level. The amount of time and money the SEC forces companies to waste on these documents is criminal. I absolutely don't respect the SEC.

However, I know how powerful they are and I know that the tendency is for government to get more powerful over time. There is no way that I would pick a public fight with the SEC. They are like the mafia...you accept their intervention as a price of doing business, adjust your prices accordingly, and look for ways to minimize your interactions with them.

Musk is not doing anyone any favors by kicking sand at the SEC. He might entertain his fans, but he's going to make it more difficult for Tesla to operate in a regulated market (for securities).

 

[suwaneedad]

They are like the mafia...you accept their intervention as a price of doing business, adjust your prices accordingly, and look for ways to minimize your interactions with them.

My thoughts exactly. I often say that the only organization I fear more than the mafia is the federal government. The mafia owns guns; the government owns guns AND jails.

 

[ChrML]

Maybe SEC should focus on inside trading instead of bullying with insignificant stuff like what Elon tweets.

It's strange somehow that 1-2 hours before good news are published on any given company, the stock price is pumped. Someone clearly know about the news before they are released.

 

[bhzmark]

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 .

Nice use of generally. But generally it can go to victims under SOX. 15 U.S. Code § 7246 - Fair funds for investors

Below is from the settlement:

Below is from the complaint: the SEC was concerned to protect, and presumably remedy, the short seller losses:

 

[Eclectic]

Maybe SEC should focus on inside trading instead of bullying with insignificant stuff like what Elon tweets.

It's strange somehow that 1-2 hours before good news are published on any given company, the stock price is pumped. Someone clearly know about the news before they are released.

The problem is that the SEC was enforcing the rule that is used against insider trading when it sued Musk. Rule 10b-5 is an incredibly broad rule that has been used by the SEC to prosecute pretty much anything it doesn't like. The only way to bring the SEC into line is to reduce its powers, which they will fight tooth and nail. And lots of members of a certain political party never want to see regulatory powers over the financial markets reduced, so the odds are that any attempt to clip the SEC's wings will fail.

 

[Krugerrand]

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.

The company is successful. He’s done his job and continues to do his job. He has every right as a citizen to voice his opinions regardless of his day job, which I again remind you he’s doing really, really well.

His SEC comment hasn’t changed his job effectiveness nor harmed the company. He doesn’t need to be any different simply because you don’t like what comes out of his mouth or his Twitter account from time to time. It’s Elon being Elon that has gotten Tesla where it is today.

Be careful what you wish for. Elon being different changes the outcome. That impulsiveness and boldness to speak his mind saved Tesla multiple times.

So, no. You don’t get to pick and choose what qualities you want him to have and ones you don’t. It’s a package deal. Except the package and stop being judgemental or find someone more to your liking and follow their company.

 

[Krugerrand]

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.

He took the CEO position because nobody else could do it. He never wanted to be CEO. You should be thanking him he did or there’d be no Tesla as of 12 years ago.

Feel free to tow the line at your place of employment and not make waves, but don’t assume your reality is that of everyone else, CEO or not.

 

[Brando]

Nice use of generally. But generally it can go to victims under SOX. 15 U.S. Code § 7246 - Fair funds for investors

Below is from the settlement:

View attachment 360193


Below is from the complaint: the SEC was concerned to protect, and presumably remedy, the short seller losses:

View attachment 360194

 

[Brando]

Nice theory. Can we find any payments?
Did SEC publish the methods of payment (how amounts were calculated?) Was for investors, did you get paid? Why not? Didn't you also suffer from this less than professional officer?

 

[Dan Detweiler]

I don't have any Tesla stock, as far as I know. I appreciate all that he has done, but he also made mistakes along the way, and I don't see any problems with discussing his mistakes.

I think that is what we're doing...discussing his statements.

Dan

 

[neroden]

Short-sellers are by definition not investors. The SEC case against Musk was legally unsound; the SEC settled it fast because they didn't want an embarassing, drawn-out *loss* in court. Meanwhile, the SEC has been ignoring actual malicious spreading of blatant disinformation, done by short-sellers, for the purpose of manipulating the stock price of TSLA downward and denying Tesla access to the capital markets.

I've been saying since Enron that the SEC has not been doing its job and has been AWOL on major frauds, but this is getting even worse. They used to just ignore all frauds, but now they're pushing completely flimsy cases against honest people while simultaneously ignoring frauds in the same *stock*, which is really a bit much for me. I'm on Musk's side here -- I have no respect for the current management at the SEC -- and frankly I think the courts will be too.

I probably would have advised Musk to be clearer about respecting the concept of the SEC, but not respecting the people currently running it.

 

[Kichwas]

Aside from the issue of 60 minutes chopping the interview in a TV-Click-Bait fashion...

If Musk respected authority figures Tesla would still be 2 Silicon Valley guys giving demo rides to their friends of a modded “build your own car” kit...

 

[Electroman]

Aside from the issue of 60 minutes chopping the interview in a TV-Click-Bait fashion...

If Musk respected authority figures Tesla would still be 2 Silicon Valley guys giving demo rides to their friends of a modded “build your own car” kit...

Love it.

 

[EV Lover]

Anyone who smokes pot, shouldn't respect the SEC....