Comment by towelr34dy | Hacker News Reader

Comment by towelr34dy | Hacker News Reader

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> This doesn't look good for him.

Can I ask what you mean by this?

Will the SEC arrest him? Ban him from being a Director of a public company?

I keep hearing about him 'getting in big trouble'. But I don't get it.

Don't get me wrong, I'm sure it is upsetting for him to possibly be forced to pay millions in fines and maybe even be kick off one of his projects.

But that isn't a very big downside, and half of it isn't even from the SEC.

I mean, there seems to be a pattern when it comes to the misbehavior of the ultra powerful:

The upside to his action has the potential in the billions, while the potential IF caught is generally going to be a fine worth millions.

He may have snubbed his board badly enough that they make him pay for this incident by removing his control of the project, but that is a separate matter.

I feel whenever someone powerful is going to be punished the media goes crazy over every detail of the noodle that is going to be used as a whip.

The SEC could seek to bar him from being an officer or director of a public company. That would be independent of any criminal charges that might be filed. Elizabeth Holmes agreed to similar terms when she settled with the SEC. In some ways I would agree that the downside for him might be limited if he can convince investors in SpaceX that they might need to wait out any imposed ban for a liquidity event.

While I agree that there are billions in potential upside in Tesla the potential return on that tweet was always negative given what was likely to follow.

>The upside to his action has the potential in the billions

Sending a reckless and untruthful tweet does not have an upside in the billions. he could take tesla private without lying to investors.

> Will the SEC arrest him? Ban him from being a Director of a public company?

The SEC won't arrest him, the SEC isn't the police. But it is looking for evidence of criminal activity, and if it finds such, it is supposed to transfer it to the appropriate authority (the DOJ in this case), which can then press charges.

I think there is a good chance he won't be in control of Tesla in 18 months. Prison is not out of the question.

Hmm, yeah, you know what now that you mention it there's loads of charismatic billionaires in prison for their tweets.

It's not the tweets, it is the effect they have on the stock price and that in turn can lead to losses with others or gains for Musk and either one of those can come back hard.

See:

https://en.wikipedia.org/wiki/Martha_Stewart#Stock_trading_c...

For how little it takes to get in serious hot water.

Can you show even $1 in gains by Musk?

The tweet quite clearly cost Musk tremendously. Two bad words without any profit motive, I doubt extremely this leads to a conviction, but speculation is cheap!

The stock jumped up enormously afterwards, and even if that wasn't Musk's goal it was pretty predictable that it would.

Not gaining from it is no excuse for doing something illegal (and stupid to boot).

The gains after the tweet were gone within a minute. The stock was up enormously before the tweet was even made.

If anything the stock is down from the whole affair.

Is it illegal for Musk to tweet something false on Twitter? I don’t think so. On April 1 he tweeted the company was bankrupt!

Keep in perspective this is two words in one tweet. When people asked questions did Tesla follow up with lies and stonewalling or more information?

These are all factors which you might consider before throwing someone in jail or telling them they can’t work at the company they built.

On Monday, August 6, the stock closed at 341.99. On the next day, the day of the tweet, it closed at 379.57, and remained higher than the Aug. 6 price until close of today at $338.69. It does seem to reckless to be a deliberate illicit plan, but then again, tweeting at all about it seemed too reckless to even contemplate, and yet here we are.

IANAL, but it's not illegal for Musk to tweet falsehoods, period, on Twitter -- such as lying about his height -- but it is illegal to disseminate false info that may be used by investors. Do you seriously see no difference between an acknowledged April Fool's joke and a statement regarding a significant change in ownership and financing of a company?

Via SEC Rule 10b-5:

https://en.wikipedia.org/wiki/SEC_Rule_10b-5

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange, (a) To employ any device, scheme, or artifice to defraud, (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,

in connection with the purchase or sale of any security."

Thanks for quoting the law.

It’s that last line which I’m specifically curious about.

What if there was no purchase or sale of any security in connection with the misleading statement?

Your story does not line up with the facts as I know them.

Besides that, yes, as the CEO of a listed company you have a rulebook to follow in case you do stuff that can influence the stock price (positive or negative, it does not even matter).

There is a format for the release of material information to ensure that the stock market remains viable, if you do not follow that format you risk getting the book thrown at you.

So yes, there are all kinds of factors that will determine what if anything comes of this. But Elon tweeting the company was bankrupt on April 1st was irresponsible, this one is just plain bonkers. Either he had funding lined up and then he should have followed proper form anyway or he is completely out of touch and focused on the wrong things.

Too little sleep will do funny things with you.

If you have the kind of plans that Elon Musk does you should probably try to avoid jail time because that might mean your toys get taken away from you.

"Only little people pay taxes" - https://en.wikipedia.org/wiki/Leona_Helmsley

Not a billionaire, but Martin Shkreli is coming to mind right now.

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