Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[neroden]

There were also these lawyers of counsel to Sheryl L. Crumpton's brief:

• Steven Buchholz
• Walker S. Newell
• Erin E. Schneider

Two of whom appear to be gentlemen, so the phrase is about 50% applicable, at least legally speaking.

These appear to be the people who have exposed themselves to personal liability by deliberately making false statements in a legal filing (misquoting the "around 500K" tweet as saying "will make 500K"). So if we want to file suit, we file suit against these four, and any unknown John Does who may also have been involved in abusing their governmental position to spread disinformation and manipulate the markets. Their best defense is "I didn't write the part which misquoted the tweet", but they'll have to point the finger at one of them.

 

[Dan Detweiler]

By the way, thanks for everyone who is disseminating all the legalese here for those not well versed in law.

To sum it all up. Tesla's lawyers to the judge...

 

[VValleyEV]

not sure if anyone else here has read "Shoe Dog", Phil Knight's excellent autobiography about the inception of Nike but the actions of the SEC recently bring to mind when the US Treasury almost bankrupted Nike by getting them to pay exorbitant duties on shoes that were imported. Nike's competitors smartly, sold comparable models at inflated prices and because of some new law at the time the Treasury said Nike had to pay duties on the Average Selling Price of comparable models vs what Nike was selling it for. The ASP was incredibly inflated as Nike's competition had colluded to sell comparable models for incredibly inflated prices.

now the treasury dept was technically following the letter of the law or whatever, but almost singlehandedly destroyed what would go on to be one of the greatest American success stories ever. a lot of similarities with that and what SEC/short sellers are doing with Tesla. Nike wiggled themselves out of that by getting their home state senator on their side (he was head of the Treasury's budgeting committee or something), I dont see a similar avenue for Tesla here besides the courts.

Thx, just bought a kindle copy of Shoe Dog, looking forward to an interesting and relevant read.

 

[Fact Checking]

In unrelated case news (Unsworth):

Reply (Motion related)

Here's the RECAP link that shows the full context:

Docket for Vernon Unsworth v. Elon Musk, 2:18-cv-08048 - CourtListener.com​

 

[azaz]

honestly, its in everyone's interests to take every opinion posted here by people with no law background with many grains of salt, including mine.

just because a person is repeatedly making super long/detailed uber bull posts doesn't mean they actually have an expertise in the matter. case in point @Fact Checking 's defense of the 420 tweet. I've talked to 3 lawyers here in NY who have dealing with the SEC on compliance issues and not a single one thinks Musk would've won at trial because as they've explained to me even if Musk thought he had money from the Saudi's pledged based on a meeting it was beyond reckless for him to post that as being "funding secured" without a term sheet or something.

 

[Nocturnal]

I feel so protected by the SEC. They are really doing a great job protecting my 200k investment in Tesla by taking Musk to court for saying "around 500k vehicles". I for one, welcome our legal overlords.

 

[capster]

The SEC is trying to avoid an evidentiary hearing, because their own reading of the law and the settlement is that there's no need for the judge to take any extra evidence and context into account, their reading is effectively that Elon is guilty by default based on the text of the tweets. An evidentiary hearing would broaden the scope of the lawsuit and bring in constitutional arguments - which is absolutely not where the SEC wants to go.

Elon's lawyers almost immediately requested a sur-reply motion:

Docket for United States Securities and Exchange Commission v. Musk, 1:18-cv-08865 - CourtListener.com

LETTER MOTION for Leave to File Sur-Reply Memorandum addressed to Judge Alison J. Nathan from John C. Hueston dated March 18, 2019. Document filed by Elon Musk.(Hueston, John) (Entered: 03/18/2019)​

Note the almost immediate motion: Elon's lawyers were expecting this and were ready for this. Their (atypically long) motion was probably mostly written already, ready to be filed on a moment's notice. Note how the SEC's similar motion on March 10 was just a single standard sentence.

Elon's long procedural motion to allow them to reply comes with full citations pointing out how the SEC violated procedure:

Dear Judge Nathan:

We represent Elon Musk in the above-captioned action. Pursuant to Local Rule 3B, I write on behalf of Mr. Musk to respectfully request the Court’s permission to file a sur-reply memorandum of no more than 10 pages by March 22, 2019, in order to respond to new factual assertions and legal arguments raised in the SEC’s Reply Memorandum to Defendant Elon Musk’s Response to Order to Show Cause(the “Reply”). The Reply included, for example, 61 pages in new exhibits and new allegations regarding the Tesla Senior Executives Communications Policy(see Reply at 10 & Ex. 12). CE Int’l Res. Holdings LLC v. S.A. Minerals Ltd. P’ship, 2012 WL 6178236, at *2 (S.D.N.Y. Dec. 10, 2012) (“It is improper in this district and this circuit to introduce new arguments in reply.”); Travelers Indem. Co. v. Excalibur Reinsurance Corp., 2013 WL 4012795, at *2 (D. Conn. Aug. 5, 2013) (“[A]party may not attempt to cure deficiencies in its moving papers by including new evidence in its reply to opposition papers[.]”). Among other things, Mr. Musk would like to address the SEC’s unsupported assertions and submit documentation reflecting the negotiation history between the SEC and Mr. Musk and Tesla, which undermines the newly-presented interpretation the SEC sets forth in its Reply.

Respectfully submitted,

s/John C. Hueston John C. HuestonCc:Counsel of Record​

Note that it was HIGHLY improper for the SEC to do this: introducing new evidence and new legal arguments on a motion they started is close to professional misconduct if I'm interpreting the rules correctly. If the SEC wanted to use these pieces of evidence and these legal arguments they should have done it in their first motion. "Surprising" the other party in a supposedly last filing before a hearing is not only not allowed, it's prejudicial and against procedure and basic trial etiquette.

Also note that the motion was submitted by John C. Hueston, the founding partner of Hueston Hennigan:

John Hueston - Hueston Hennigan Founding Partner

John Hueston has been described by Chambers as “the best lawyer of his generation” with a “commanding reputation for his trial advocacy.” Rated one of the nation’s top trial lawyers, Mr. Hueston has been recognized twice as a “California Lawyer of the Year,” including for his recovery of $5.15 billion after trial.​

Hueston-Hennigan are putting all their weight behind this - you don't often see a founding partner of a law firm filing a procedural motion ...

The almost immediate filing also suggests to me that they not only expected such a filing from the SEC, but that they actually wanted this outcome and had figured out the best reply in advance.

Basically the SEC already went outside the usual civil procedure of contempt of court motions by requesting a third round - now Tesla is requesting a fourth one. The regular contempt of court proceedings is civil cases is that the 'accusing' party files a motion and the 'defending' party gets a single reply, and a contempt hearing follows. The SEC got one more reply, which is in principle prejudicial to the defending party as it gives the SEC two rounds while they only had one round. So I was expecting this but was unsure whether Elon's team would request a sur-reply motion.

BTW., it's pretty clear from recent price action that some traders apparently knew about this - if SEC officials are leaking to certain market participants about these legal proceedings then that's insider trading, tipping, breaking of attorney client privilege, professional malfeasance worth of jail time and disbarment for life ...

If so then these SEC officials/lawyers are playing a dangerous game here, committing far more serious violations of the law (several felonies) and inflicting far more economical damage than even the worst thing they are accusing Elon of.

As I pointed it out yesterday the pretty much only way forward for the SEC was to escalate, while trying to narrow the scope of the case. So them opposing an evidentiary hearing and ratcheting up the rhetoric was fully expected. They are still trying to pressure Elon into settling. Instead what they are offering is further proof of bad faith and of the harmful effects of their interpretation of the settlement.

My take: it's amateur hour at the SEC and the judge will NOT be amused. But again, I'm not a lawyer and this is just my opinion.

Wow!! You go, FC!!

You know you can take the bar exam (at least some states in the US at least if I’m not mistaken) without a law degree? Maybe you should take it if only for grins?

 

[ReflexFunds]

honestly, its in everyone's interests to take every opinion posted here by people with no law background with many grains of salt, including mine.

just because a person is repeatedly making super long/detailed uber bull posts doesn't mean they actually have an expertise in the matter. case in point @Fact Checking 's defense of the 420 tweet. I've talked to 3 lawyers here in NY who have dealing with the SEC on compliance issues and not a single one thinks Musk would've won at trial because as they've explained to me even if Musk thought he had money from the Saudi's pledged based on a meeting it was beyond reckless for him to post that as being "funding secured" without a term sheet or something.

Thomas Gorman, a partner at the law firm Dorsey & Whitney and former SEC senior counsel, said Musk's statements, which he made on Twitter, weren't smart from a business perspective, but that doesn't necessarily mean Musk committed fraud.

"There's a significant difference between bringing a law enforcement action, charging someone with fraud, and saying, 'This is not really a great way to do your business,'" Gorman said.

The SEC's lawsuit claims Musk said a representative from Saudi Arabia's Public Investment Fund had shown interest in taking Tesla private, but that Musk had never discussed any of the specific terms he described on Twitter with the Saudi fund or any other potential backers before making them public. Those terms included the proposed $420 share price and an option for all existing Tesla shareholders to remain with the company after it went private.

But Gorman said the Saudi fund's reported interest in a take-private deal was enough to make Musk's statements legal, if ill-advised. And the SEC's current allegations that Musk hadn't ironed out the details don't change that, Gorman said.

"There's a reasonable basis for what he said," Gorman said of Musk's tweets.

The case was far from open and shut, and whether or not Elon would have ultimately been found guilty of an offence, the SEC's threat of removing him as CEO due to a reckless choice of language in a single tweet was recklessly disproportional and not in the interest of Tesla shareholders.

 

[kyzhk]

honestly, its in everyone's interests to take every opinion posted here by people with no law background with many grains of salt, including mine.

just because a person is repeatedly making super long/detailed uber bull posts doesn't mean they actually have an expertise in the matter. case in point @Fact Checking 's defense of the 420 tweet. I've talked to 3 lawyers here in NY who have dealing with the SEC on compliance issues and not a single one thinks Musk would've won at trial because as they've explained to me even if Musk thought he had money from the Saudi's pledged based on a meeting it was beyond reckless for him to post that as being "funding secured" without a term sheet or something.

Former SEC lawyer disagree with all of them, what is their qualification?

A former SEC lawyer says the agency shouldn't have sued Elon Musk
"A former SEC lawyer says the agency shouldn't have sued Elon Musk"

 

[neroden]

I hear you, but there was no problem booking the reservations in 2016, i.e 150k+ within minutes. This rate is definitely lower by an order of magnitude or more. Thoughts?

I believe the actual ordering system is different from, and less robust than, the "reservation" system. There are indications that they were literally two separate computer systems, which is why they were not even remotely able to deliver orders in even close to reservation order even when they were *trying*. I also suspect there is a manual processing element -- some sort of validation. I can't prove this, but there have been hints.

TLDR: Tesla's software systems are not state of the art.

Now I really have to stop posting.

 

[azaz]

The case was far from open and shut, and whether or not Elon would have ultimately been found guilty of an offence, the SEC's threat of removing him as CEO due to a reckless choice of language in a single tweet was recklessly disproportional and not in the interest of Tesla shareholders.

afaik Thomas Gorman was in the small, small minority that took this view yet is constantly cited in this thread because it reinforces people's priors. confirmation bias is dangerous when it comes to investing. most other analysts, including the people I spoke to, viewed it as a fairly blatant violation of securities law.

 

[ReflexFunds]

afaik Thomas Gorman was in the small, small minority that took this view yet is constantly cited in this thread because it reinforces people's priors. most other analysts, including the people I spoke to, viewed it as a fairly blatant violation of securities law.

Most people you spoke to and most people interviewed on the media just read the misleading clickbait media narrative and didn't realise the head of Saudi's PIF actually told Elon he would take Tesla private and that he had sole authority to do so.

 

[Cherry Wine]

honestly, its in everyone's interests to take every opinion posted here by people with no law background with many grains of salt, including mine.

just because a person is repeatedly making super long/detailed uber bull posts doesn't mean they actually have an expertise in the matter. case in point @Fact Checking 's defense of the 420 tweet. I've talked to 3 lawyers here in NY who have dealing with the SEC on compliance issues and not a single one thinks Musk would've won at trial because as they've explained to me even if Musk thought he had money from the Saudi's pledged based on a meeting it was beyond reckless for him to post that as being "funding secured" without a term sheet or something.

Honestly, it's in everyone's best interest to take opinions of some attorneys with a grain of salt. I know a few poor ones; holding a JD does not make one's opinion sacrosanct.

 

[Anstandswauwau]

Some data points directly from Tesla:

• Tesla HQ appears to be very happy with MY preorders
• M3 osborne'ing MS & MX is indeed a thing in the EU markets (no figures given)
• Navigate on Autopilot should arrive in H2 '19; may have feature parity with US NoA at the time of release
  
• M3 alone is expected to increase most EU EV markets by 2x (over 2018)!
• EU markets will receive a steady stream of M3s, with no sign of a slow down after the initial "rush". If anything, shipments would have to increase over the next 4-5 months to hit their sales target!
• Both, current M3 sales and target numbers, are off-the-charts crazy for my home country
• News of killing MR took them by surprise. RWD expected for July/August, SR/SR+ could now arrive in the EU sooner than expected ("October-ish")

Bullish.

 

[azaz]

Most people you spoke to and most people interviewed on the media just read the misleading media narrative and didn't realise the head of Saudi's PIF actually told Elon he would take Tesla private and that he had sole authority to do so.

the people I spoke to were aware of this, lets get this thread back on track though. my only point is to take people's legal opinions, who aren't lawyers, with many grains of salt. confirmation bias is a hell of a thing, thats all.

 

[sparcs]

• Elon consciously chose a particularly safe method to comply: he started self-censoring every tweet after the Disclosure Committee was established, avoiding ANY mention of material or potentially material information,
• This method, by definition, resulted in him not having to pass through tweets the Disclosure Committee or the securities laweyr,
  
• As a result the number of Elon's tweets dropped roughly in half compared to the period before, as laid out in the expert opinion,
• Elon also limited most of his Tesla tweets to after market hours,
  
• This was all a result of his self-censorship and good-faith effort to avoid conflict with the SEC.

I've also noticed that Elon is retweeting others to avoid having to make a direct tweet himself. Another way he is essentially self-censoring by retweeting articles or even retweeting the official Tesla account.

 

[neroden]

Way OT

In unrelated case news (Unsworth):

Reply (Motion related)

Some of the citations of insults which were the basis of defamation cases which *lost* are fascinating. FYI, it's very hard to win defamation cases in the US.

 

[MikeC]

I hear you, but there was no problem booking the reservations in 2016, i.e 150k+ within minutes. This rate is definitely lower by an order of magnitude or more. Thoughts?

Recall that Model 3 reservations were in-store only before the reveal, so the 115k reservations were made throughout the day, one order at a time at each store.

 

[VValleyEV]

honestly, its in everyone's interests to take every opinion posted here by people with no law background with many grains of salt, including mine.

just because a person is repeatedly making super long/detailed uber bull posts doesn't mean they actually have an expertise in the matter. case in point @Fact Checking 's defense of the 420 tweet. I've talked to 3 lawyers here in NY who have dealing with the SEC on compliance issues and not a single one thinks Musk would've won at trial because as they've explained to me even if Musk thought he had money from the Saudi's pledged based on a meeting it was beyond reckless for him to post that as being "funding secured" without a term sheet or something.

OK, let’s hear your opinion and your attorney friends’ opinion on the current case in adjudication, rather than trying to discredit opinions here on this case based on opinions you have read about the original settlement.

Whereas there was some basis for the SEC complaint about the “funding secured” tweet, this dispute is about Elon’s good faith efforts to follow through with the settlement terms he agreed to, which is a very different matter. Please take a look at the record, including the very readable documents filed by both sides, and explain to us how the predominance of law and fact In this case can be on the side of the SEC. Especially I would like to hear how the analysis by @Fact Checking fails to meet your credibility standard.

 

[MP3Mike]

In unrelated case news (Unsworth):

Reply (Motion related)

And a nice quote from that:

In short, Unsworth's opposition was a response to a motion Musk did not file.