Or Elon and his lawyers are confident they can win the case.
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Or Elon and his lawyers are confident they can win the case.
After reading the complaint, so the Fund gave Elon a blank check within reason. The Sec didn't like how he didn't discuss 420 with anyone therefore how did he know funding was secured if he never discussed it with the Fund? A few weeks later, Elon has all the funds lined up. Sec thinks fraud was committed from a misleading statement from Elon? Should he have tweeted "blank check secured" instead?.
When I first heard about the tweet, my own confirmation bias led me to believe that Elon plays 4 dimensional chess while everyone else is playing checkers and he has this all figured out with some whacked out innovative financial engineering.
When I soon learned that top notch Wachtell, Latham and Munger Tolles attorneys were involved, and Saudi Fund and Goldman and Silver lake were on the funding side, my belief was further confirmed.
That was all wrong.
Some innovators, like Steve Jobs and Elon Musk and Branson (and sorry, Trump is an orange version of this too) -- these people are less constrained by normal ways of doing things and can be great leaders when they lead the teams around them to do something that doesn't seem possible to mere mortals. They often do this by distorting the reality around them -- Ignoring the normal barriers to what they want to do. They do not discount risks, or costs and low probabilities of success and not accounting for the effort and time it will take to achieve what they want.
EM tried that in this case and it didn't work. In other cases it does work: just like he said, "reusable rockets let's do it", "EV cars faster than a McClaren, let's do it". But recall he also said "swappable batteries", "x-country drive on FSD" and bunch of other things that didnt work (yet). But that's ok for engineering and product technology. You can't have success with 3 things unless you try 10 or more. So failure often breeds success.
I suspect the tweet and the funding was another attempt to try something out and see if it works. And let's really motivate people to make it happen by acting as if it is already under way. That doesn't work well with securities laws.
A 10b-5 violation requires scienter aka intent, which can be satisfied with recklessness. By being sloppy with descriptions of a potential transaction, and describing the transaction in terms that could be reasonably be construed to indicate more certainty than in fact existed at the time, he was not being accurate. The real issue is whether the sloppiness and imprecision crossed the line into recklessness and satisfied the scienter/intent element of 10b5 fraud.
This is a tough issue. You might wonder, why is this case in NY 2nd circuit when Tesla, and most of the witnesses, are in California and the 9th Circuit.
The answer is that the Ninth Circuit has higher standards for recklessness, and here the SEC was seeking the 2nd circuits lower standards. See this summary of the law if you are interested . https://www.wsgr.com/PDFSearch/pleading_of_scienter.pdf
This is not a slam dunk case, but it is not a BS case. And by choosing NY, the SEC has a slightly lower threshold to prove scienter with a lower standard of recklessness.
But we need to have more facts about what EM intended, and how much care he took in aligning his statements to reality. That entrepreneurial spirit that serves him well to push the envelope of engineering and product development did not serve him well here.
Likely and best outcome? A fast settlement with a fine that will hurt (at least tens of millions), but leaving him as an officer and director.
Other possible outcomes:
A settlement with a fine and agreeing to turn over CEO role to someone else.
A trial (very unlikely) that I think would lean a little bit in EM's favor if he has (as I hope he does) some real helpful facts to show that the reality of the prospects of a go-private transaction matched up with the descriptions in the tweets. But all trials are a roll of the dice.
Also possible that DOJ will have a criminal complaint against Musk, and possible that the SEC will also have a complaint against the company because of the involvement of the company blog and the IR dept. It's a mess.
It's also a totally unforced stupid error.
watch out for your own confirmation bias -- mine certainly led me astray back on Aug 7.
When I soon learned that top notch Wachtell, Latham and Munger Tolles attorneys were involved, and Saudi Fund and Goldman and Silver lake were on the funding side, my belief was further confirmed.
That was all wrong.
Some innovators, like Steve Jobs and Elon Musk and Branson (and sorry, Trump is an orange version of this too) -- these people are less constrained by normal ways of doing things and can be great leaders when they lead the teams around them to do something that doesn't seem possible to mere mortals. They often do this by distorting the reality around them -- Ignoring the normal barriers to what they want to do. They do not discount risks, or costs and low probabilities of success and not accounting for the effort and time it will take to achieve what they want.
EM tried that in this case and it didn't work. In other cases it does work: just like he said, "reusable rockets let's do it", "EV cars faster than a McClaren, let's do it". But recall he also said "swappable batteries", "x-country drive on FSD" and bunch of other things that didnt work (yet). But that's ok for engineering and product technology. You can't have success with 3 things unless you try 10 or more. So failure often breeds success.
I suspect the tweet and the funding was another attempt to try something out and see if it works. And let's really motivate people to make it happen by acting as if it is already under way. That doesn't work well with securities laws.
A 10b-5 violation requires scienter aka intent, which can be satisfied with recklessness. By being sloppy with descriptions of a potential transaction, and describing the transaction in terms that could be reasonably be construed to indicate more certainty than in fact existed at the time, he was not being accurate. The real issue is whether the sloppiness and imprecision crossed the line into recklessness and satisfied the scienter/intent element of 10b5 fraud.
This is a tough issue. You might wonder, why is this case in NY 2nd circuit when Tesla, and most of the witnesses, are in California and the 9th Circuit.
The answer is that the Ninth Circuit has higher standards for recklessness, and here the SEC was seeking the 2nd circuits lower standards. See this summary of the law if you are interested . https://www.wsgr.com/PDFSearch/pleading_of_scienter.pdf
This is not a slam dunk case, but it is not a BS case. And by choosing NY, the SEC has a slightly lower threshold to prove scienter with a lower standard of recklessness.
But we need to have more facts about what EM intended, and how much care he took in aligning his statements to reality. That entrepreneurial spirit that serves him well to push the envelope of engineering and product development did not serve him well here.
Likely and best outcome? A fast settlement with a fine that will hurt (at least tens of millions), but leaving him as an officer and director.
Other possible outcomes:
A settlement with a fine and agreeing to turn over CEO role to someone else.
A trial (very unlikely) that I think would lean a little bit in EM's favor if he has (as I hope he does) some real helpful facts to show that the reality of the prospects of a go-private transaction matched up with the descriptions in the tweets. But all trials are a roll of the dice.
Also possible that DOJ will have a criminal complaint against Musk, and possible that the SEC will also have a complaint against the company because of the involvement of the company blog and the IR dept. It's a mess.
It's also a totally unforced stupid error.
watch out for your own confirmation bias -- mine certainly led me astray back on Aug 7.
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good point.
the problem is that sense doesn’t control the market. we have to adjust for lunacy amidst tesla gaining more public influence and power. honestly if it wasn’t this, it’d be something else. it just sucks that it was elon that threw them a fat pitch.
You cant file a class action against the govt. In fact, it is unlikely that we could even file an amicus brief. This is an enforcement action.
Bet TSLA
Active Member
What?? You don't think it will open green on Friday? Have a little confidence!
i get it. but us being pants by greedy lying corrupt pigs doesn’t help the cause further either. we have to play the cards were dealt too.
bdy0627
Active Member
The way they are handling this, it's almost as if this is more about PR for the SEC than anything else. Very interesting.
The Wall Street Journal on Twitter
What the duck. This of all the things enrages me.
He should have just settled with SEC if he had that option instead of putting TSLA in play like this. Anyway you look at it, tweeting going private was not well advised.
What the duck. This of all the things enrages me.
He should have just settled with SEC if he had that option instead of putting TSLA in play like this. Anyway you look at it, tweeting going private was not well advised.
I feel your pain. Minutes before close today, I decided to buy some Oct 5 calls in preparation... Probably more than I should have. Less than 10 minutes later, this. Seriously, how does one get this unlucky? Looks like I'll be rebuilding for months... Again. *sigh*
bdy0627
Active Member
I didn't read the entirety, but what I did read suggested the SEC hasn't interviewed the Saudis. Obviously, they wanted to pursue this litigation quickly and didn't have time or the authority to compel the Saudis to answer questions. The statements in the lawsuit continually state "according to Musk."
Those headlines would have been just as bad, so might as well fight.
bdy0627
Active Member
Mader Levap
Member
Most likely his lawyers noticed something unacceptable in settlement. Assuming this WSJ tweet is true, of course.
It's also a totally unforced stupid error.
.[/QUOTE]
This is what gets to me, a simple tweet led to this mess and at the very least will distract from what is really important here, the fact that Tesla has finally turned the corner into a real auto manufacturer with numbers and profits to prove it. It was supposed to be a monumental event but we will be left discussing a stupid tweet which I'm sure was done with very little thought.
The power of twitter is unbelievable ......
tomorrow will suck.
Cheers to the longs.
I need a drink.
.[/QUOTE]
This is what gets to me, a simple tweet led to this mess and at the very least will distract from what is really important here, the fact that Tesla has finally turned the corner into a real auto manufacturer with numbers and profits to prove it. It was supposed to be a monumental event but we will be left discussing a stupid tweet which I'm sure was done with very little thought.
The power of twitter is unbelievable ......
tomorrow will suck.
Cheers to the longs.
I need a drink.
bhtooefr
Active Member
Fighting means years of just as bad headlines, instead of weeks, though.
Yeah but they don't challenge those statements either. I mean, if a basis of you case is unbelief of that position, then you have to provide evidence of unbelief, of which they provide none at all.
Any body with dry powder, load up the truck, probably last sale of the year.
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