SEC Sues Musk and Seeks Ban for His Tweets on Go-Private Deal

You have to admit though, based on comments all over any story about Tesla here at least, that it works as a bogeyman. The only other fiction that’s more powerful is that Musk does everything he does to send humanity to Mars, save the world, etc. Musk has a true talent for figuring out what his target audience wants to believe, and then selling it to them at a premium. Smart, technically minded people (key early adopters of Tesla) are desperate for a way to keep humanity going in the face of climate change, possible impact events, and so on. Musk more or less frames his rather mundane personal aggrandizement and money-making endeavors as lynchpins in just those areas. He helps to convince people who want to believe, that they can help save the world not through anything like sacrifice, but by buying stock or a luxury car!

They eat it up, and are enraged at people who scoff, and no one scoffs harder than someone who puts their money on a bet that the stock is overvalued. As a result the short is already a subject of hate, and perfect to pin all of the evils of the world on. It perpetuates a classic tribal narrative and dresses it up in just enough pseudo intellectual finery to convince a target audience which already wants to believe. As a bonus that audience thinks it’s too smart to be fooled that way, and above tribalism, making it easier to sell the story and harder for them to admit what they’ve fallen for.

Look at some of these comments, and you see the evidence of just what I’m talking about!

The law says a lot of things. I'm ok with short sellers losing their shirts regardless.

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I also take the long view; Elon is instrumental to the long-term outcome for Tesla, our species, and our planet.

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Because he made short sellers look like idiots? I think not. I just bought more.

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SEC suing Elon Musk is , quite frankly one of the most abhorrent actions a US govt agency can ever do against genuine American Entrepreneurship and American innovative spirit. There is not a single human being on the planet who comes close to Elon Musk when it comes to big , bold innovation and tech entrepreneurship who is putting his heart and soul into leading the human race into the future.

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you can’t disrupt or otherwise show up all of these players: the us/eu/russian/chinese space industries (and by extension the governments of china and russia), the oil industries of russia/saudi/usa, the major auto manufacturers, power companies, professional car and truck drivers, and the us dealership association (what am i forgetting), all of whom are politically very well connected, and some of whom have their hordes of paid shill internet commenters, and upvoting/downvoting bot nets (not that that would ever happen on hn (and if it would it’s against hn rules to suggest it)) and expect not to get trounced. elon might have fucked up by sending that tweet, but the response here, on reddit, and by the gov’t is way out of proportion, esp considering everything positive that this man has accomplished and is currently working on.

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He didn’t screw anyone over. Wall street gamblers lost money, and our culture coddles Wall Street bros like helpless babies. Traders who lost money wouldn’t have had the stock to trade without Elon in the first place!

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The entire world will lose if Elon is forced out. He’s the biggest fighter for climate change and space travel in modern history, greater than Al Gore in marketing and execution, greater than Buzz Aldrin, Tyson, and cosmos. I’d much rather have an honest relatable Elon Musk than a suit. I’d rather have creativity than suffocating structure.

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The subtext is that Elon intentionally bumped the stock price to screw over short sellers like Jim Chanos. But the rationale behind 10b5 is to protect investors from fraud. Right, we are not concerned with protecting short-sellers who spend all day on twitter making up negative stories about their targets.

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The battery and solar operations side of TSLA are critical to spaceX's mission to Mars. Can't have a martian colony without being able to harvest and store energy. Additionally the CV being done at Tesla could prove critical in automating prefabrication of living spaces and life support infrastructure. Can't be doing anything like that remote controlled with 8 min latency.

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What a joke, there are plenty of scumbag and criminal leaders of corporations and this is the guy who doesn't walk. It'll be a sad day for the world if this guy goes to jail.

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I know where Elon comes from, what missions and goals he has stated for years now, and what he is trying to accomplish. I promise you, Elon legitimately thought there would be an opportunity to go private again. He's said he wanted to do so in the past, and even has said they never wanted to go public, but were left with no choice. I don't think any part of Elon was trying to commit fraud or security manipulation. He made a mistake, we all do. He said something that should not have been said at that given point of time. I'm sure he was excited. He even said he typed that tweet in the car after leaving SpaceX.

If you divert some of the water from a river, the water level goes down. How much does it go down? You can calculate it if you know the values of all the variables that go into it. If you don't know all their values, does that mean the principle ceases to operate?

> Seems like a boogeyman to blame all manner of company ills on.

Not being responsible for 100% of all problems is not equivalent to being responsible for 0% of all problems.

Right now >28% the TSLA float is sold short[0]. I can't imagine that not have an impact on the price.

[0] https://www.gurufocus.com/term/ShortPercentageOfFloat/NAS:TS...

You're right. They definitely aren't immaterial misses. I'm not trying to deny that there are misses.

I'm trying to talk about the vector that Tesla is representing and the way that vector makes the claims about their misses less important. There is now a new trend in the auto industry, with the monthly sales of ICE vehicles going down every month and the number of electric vehicles sold every month going up. Tesla is now projected to have a vehicle within the top 20 most sold vehicles in the United States. They are projected to be first by vehicle revenue for a single model. They are doing worse than they wanted, but not terribly. They need support, in my view, so that they can continue their mission of electrifying transport. Not to be torn down, which feels almost suicidal at societal scale for as long as the other manufacturers still make most of their income on ICE vehicles.

Though, I suppose legislators will eventually ban those vehicles outright, it is already starting to happen in some places.

Hope you have a wonderful day. As for me, I'm in the house of mourning. I'm certain that more people are going to suffer in the future. It has me really down. I'm watching people trying to bet on disasters occurring, seeing another person realize this and try to do something to fix it, and then seeing that blow up in the most horrible way. It is tragedy. Already, I have friends and family that have been impacted by climate change. I can't stop caring about them.

We're late on stopping climate change. So is Tesla. It sucks.

But, you're right that I'm speaking too broadly when I say it is a bet against all renewable energy. Thank you for removing this speck from my eye. I appreciate it.

As to your being offended by my reference: First off let me be clear that Elon Musk is a man. He cries the tears of a man. He has the many failings of a man. Many talks in which he describes his life makes it clear that he hates it and would not recommend it to others. Part of what is feeding into that these days is the cruelty directed toward him, much of which is not fully justified by the ever so slight nature of his failings.

Now as to your attempt to show Elon Musk as having done some sort of wrong? Let me remind you of some of your rusty scripture:

Jesus Christ talks about the many mansions of his father. He does not need to buy them. He made them. All things are made by and for him. Therefore, I'm not about to condemn someone for having mansions, in isolation from the rest of their deeds [2]. Solomon also had incredible wealth. Rather than calling that evil, Jesus Christ described Solomon as wise.

As to bailing out family? Jesus Christ came to save us, despite our sins. A healthy person doesn't need a healer. Moreover, we are described in scripture as children of God. So I'm also not about to condemn a person for trying to help someone related to them. Especially since I consider the continuance of solar deployment to be a moral /good/. That said, I've read the reviews of SolarCity. Clearly SolarCity is falling well short of the rest of Tesla given customer reviews of the company. Hopefully they manage to get things together at some point. That would be wonderful. Eventually, I expect solar to be a dominant provider of energy. It seems to me like a good long-term investment.

[1]: https://twitter.com/TeslaCharts/status/1008405211432570880

[2]: TL;DR for the people who didn't read the article: He bought mansions. The mansion are near another. He converted one it into a school for his kids and others he knew who presumably were interested in attending. The other was for his wife, who was interested in having the option of alternate living arrangements. Another is thought to house security staff. It is a tabloid piece, trying to make a sordid story of Elon Musk's personal life for the entertainment of gawkers.

A buyer who would otherwise have had to buy from a seller who wanted a higher price.

The stock price is really the value for which shares were most recently exchanged. If the price is $500, shares were exchanged for $500.

That isn't the same as what other people value the shares at, which is different for each person. The people who own shares value them at more than their market price (or they would sell) and the people who can afford but don't own shares value them less (or they would buy). Someone could own shares and value them at $600, so they wouldn't even sell at $550, meanwhile another owner values them at no more than $500.02, so they sell as soon as the price hits $500.02.

That's where the bid/ask spread comes from. The lowest seller values the shares at $500.02, the highest buyer values them at $499.98, so the seller keeps their shares and the buyer keeps their money, and the share price is still considered to be $500.00 because that's what the last actual sale went through as. To get another transaction either the seller or the buyer has to "cross the spread" and meet the other side's price and then the price goes up or down based on whether it was the buyer or the seller.

So what happens when someone makes a short sale? They borrow shares and cross the spread to sell for $499.98. Now the share price has gone down two cents. Moreover, the buyer willing to pay $499.98 now has their shares. The next highest bid is $499.97. If another short seller supplies that buyer with shares, the share price drops again and so does the bid price, because the previous high bid already has their shares. The more short sellers, the lower the sale price.

This is one of the reasons why short selling is frequently unprofitable. If you're not an early short seller, you're selling shares for $450 that all else equal would be worth $500 once the existing shorts close their positions, and at some point you have to buy them back. Which means to make money the company doesn't just have to lose value, it has to fail hard enough to prevent your profits from being erased by other shorts buying back shares to close their positions.

> Telsa share price has risen through extreme short interest for years. How?

If the share price would rise by $3 while short selling would cause it to decline by $1 then on net the price rises by $2, i.e. $1 less than it would have but still a positive value.

A limit order doesn't necessarily get filled immediately, or at all.

If there is a lot more volume in sell orders than buy orders on the book, it is a buyer's market and price will go down. Inversely if there is more buy order volume, it is a seller's market, and price will go up.

I don't know if shorts have affected the price of Tesla significantly. This is really fact-specific and I didn't do the research. But the principle is sound.

Pebble.

Did you ever use the first 3 versions of OSX ? Because I did. And the quality was pretty unacceptable compared to OS9 or Windows. On the hardware side how long did Apple stick with the coffee puck mouse. Or how about the iPhone 1 never even having 3G or MMS or how about all of the issues with the GPU.

But yet Steve Jobs still shipped it all. Why ? Because his slogan was always "real artists ship".

But it’s getting easier and easier to skip a generation of laptop these days. My old machine is just starting to get slow enough that I notice. That’s a big problem for manufacturers.

That didn't always used to be the case. Previously at launch an MBP was often quite keenly priced for the specs. But the last couple of generations have been badly overpriced.

When I bought a Cinema Display I figured out that a display with the same response time and color gamut would run about $75 cheaper and have a plastic case.

$75 for aluminum, more ports and being able to pick it up that day was more than fair.

Thing is, if you drop a few upgrades, such as dropping the CPU speed by a few percent, dropping the dGPU, going to a 1080P screen, and using a SATA instead of NVME drive, you're down to $1400 for largely minor decreases in performance and capability (none of those things would affect my use cases appreciably, you might be different). Apple doesn't give you those options in a MBP, and the standard MacBook is pretty outdated, topping out at an old dual core i7.

If you want something with a similar form factor (light and thin) then anything with similar hardware specs from another company has always been around the same price, or more expensive.

I think the perception of over priced laptops is misplaced because people look at base specs, but ignore form factor. And, yes you could argue that you don't need something so thin and light, and maybe that's true for some people, but if it's a feature you want then apple laptops are competitively priced.

Which one is that? Until this past July, they were consistently a CPU generation behind every other brand on the market.

I paid $800 (I think it was $899 retail) for my current 13" Dell Inspiron 7000 laptop. It has an i7/DDR4 RAM vs the i5/DDR3 in the MBP, but given the slower hard drive, let's call it even.

The comparable MBP is $600 more at $1,499.00. The display is no doubt better, but I don't know that it justifies that much more money.

But the new Pro series is just not pro enough for me. Why the hell should I buy a dongle for everything? It's supposed to be pro - you shouldn't have to basically carry a whole bunch of dongles to get stuff done. I don't know, maybe I am technophobe, but sometimes taking away the stuff which works and useful to shave a mm in height is just stupid from my perspective. If I want a super light laptop without the need for ports etc. I would go for an Air.

Dunno what's going to happen but will stick to my 2013 till it literally won't work anymore.

/end of rant

You still need to understand all the details. You just didn’t necessarily need to do the grinding on iterations, schematics, math, etc.

There is a causal link between Elon Musk putting all his money into SpaceX and Tesla and their successes. This is true from the obvious way (they were literally close to death with his last infusion), but its a truth that is more than superficial.

Mankind needs people like him - with all ecological doom and gloom slowly unfolding, next mandatory frontier is clearly space. Also, disrupting entrenched monopolies/oligopolies that got just too comfortable milking people of their money for very minor improvements of their products.

I second the recommendation of watching the interview. There is way too much misinformation surrounding Tesla and Elon Musk.

I hope to God the auto industry doesn't lose the competition which scares them into changing themselves more rapidly than the coming fires and floods. The whitehouse is no friend to the renewable energy industry, advocating for the reduction of the price of oil.

Elon Musk is not an engineer and does not do any engineering at Tesla.

But let's answer a question you posed in your comment: Why couldn't all those engineers build a cost effective reusable rocket system before Musk came along? Or how about an electric car that could go 400 miles on a battery charge?

They could have, because obviously, they did. Their collective expertise is what made that possible. Elon Musk didn't just draw up all the plans and send it to them to make happen. Elon Musk, however, could never in a million years have done it alone.

So I didn't miss your point, I disregarded it. Those dime a dozen engineers are far more important than Elon.

> Nobody walks around thanking their skin cells for existing.

Well, skin cells are not human beings, so comparing human beings to skin cells is... disturbing at best.

"Absolutely fawning worship" is unnecessary hyperbole, there is a vast amount of middle ground between that and your position. But I suppose if you can't make a reasoned argument, you have to resort to that (and we're off to the ad hominem races!).

"Most titanic genius" is more telling hyperbole, reiterated from your first post apropos of nothing. I didn't say anything about him or his genius, but you continue to mock and, yes, tear down.

When you say "Tesla is just [this]. SpaceX is just [that]," that's a tear down. You're reducing and diminishing companies that have undoubtedly made real impact, but why? Forget about Elon the Magnificent for a second, I would guess that you have similar things to say about Google, Apple, and the rest.

So I ask again, what company is doing things worthy of your respect? You're very good at reducing big things to nothing, but can you prop anything up? Can you support something? Maybe you're afraid to, because you know I can reduce and diminish it. That's easy, anyone can do it. But there's nothing interesting about it, there's no value, all it does is reveal insecurity.

It's a different number because it includes cost of the sale infrastructure. Unfortunately, it's for the quarter ending in June, so the volume of model 3 is still not very relevant against the other models.

https://www.nissan-global.com/EN/ZEROEMISSION/HISTORY/

I'll give an example. An often repeated story about Tesla is that they are not making a profit off any vehicle they make. It's a false narrative of a very particular type with a very particular goal: it generates confusion about the benefit of infrastructure investment.

It's clearly a false narrative. Investment in infrastructure is obviously a wise move for a company with ambitions as vast as Tesla. So why do you hear this false narrative? It comes down to the company being valued according to the assumption that the company will make these infrastructure investments. There is a causal link between the stock price and the infrastructure investment. If confusion and doubt exist about the value of that infrastructure investment, then it produces volatility which can generate money for the short position.

In truth, these people should be disregarded. However, unfortunately, negative news tends to get more attention than positive news. So the news tends to end up favoring these short-interest fueled stories as a consequence. Plenty of people realize that climate change is real and that we all stand to benefit from Tesla succeeding in its mission. Many people don't realize that the majority of news about Tesla is being fueled by interests who stand to profit from causing harm to the company.

The submarine of the ICE industry pieces on Tesla at least I think people are savvy enough to grasp fairly easily. They tend to have a more obvious structure, with the way a rival auto-industry expert will be brought on to breathlessly talk about how their competitor in Elon Musk is so crazy that he ought to be removed from leading the company or how electric vehicles are impossible or not ready or some other nonsense. Anything to harm their competition. They're just acting according to their own self-interest.

But the amplification of confusion generated by short interests? It was much harder for me at least to understand where that was coming from. I thought the people saying it were idiots up until I got so annoyed with it I downloaded the analysis of Tesla by a firm that was shorting it in which they laid out the way Tesla was a story stock and explained its subsequent volatility. It was really eye opening, because I had expected them to be idiots saying things that were false because they truly believed them, rather than explaining that they figured Tesla would do well, but that their was potential to profit off volatility. It helped me understand the strangeness of the news. The pieces amplifying confusion have more to do with the profit model of news and its relationship with attention, rather than value creation, and some people being clever enough to abuse that.

It's what motivated some of the interest Elon Musk had in going private. These things haven't been done under a rock. The Tesla board has called out the news for their amplification of these lies. Elon Musk has called it out. Plenty of green sector focused news have been calling it out. It's pretty sad that people are struggling to understand it. When tangentially related subjects have been brought up on Hacker News in the past, it was described as paranoia on Elon Musk's part. I guess its easy for Hacker News to understand the submarine that Paul Graham wrote about, since people read his writing, and harder for it to figure it out the rest of the bias, because someone didn't lay out the forces clearly enough. I'm not as good a writer as Paul Graham. I can't get across what I've noticed with as much eloquence. Hopefully people like him continue to be thoughtful and share their thoughts, so that everyone can benefit.

Tesla is the most shorted stock on the stock market. Tesla is a leading player in electrification of transportation. Climate change is leading nations to ban ICE vehicles. Something about these three statements, taken together, is odd. People point to Elon Musk being a fraud, but meanwhile he was so effective in his role at SpaceX that the superpower of Russia can no longer compete with his company in the sector that it is focused on. People say he is incompetent to reduce dissonance, meanwhile his friends and engineers insist otherwise even in the discussions in this news item and even on topics related to engineering rather than business.

> I have shares and you only lose money if you decide to sell the shares now

Many stocks went to near zero just to get de-listed next minute. Some of these fine folks that have played marked by your advice blew their head off in the process. Never assume stock will just rebounce; to the contrary before you execute a trade set a head ceiling (in most cases) and definitely set the floor that you going to play by strictly following it. This is indeed an advice any book on trading stock market will tell you.

I'm not gonna comment on the part about Musk being scammer or not. I don't want to change a subject all of sudden.

By "another company's obscure sports car" I assume you're referring to the Lotus Elise - arguably one of the world's better known and more successful sports cars.

Instead he said he heavily implied that he would take it private and already had all the money he needed from various investors.

There’s a world of difference between those two statements.

This is textbook market manipulation.

They absolutely allege negligence.

> As a result, Musk knew or was reckless in not knowing that his August 7 statements were false and misleading.

That’s negligence. This exact phrase is repeated 3 times in the complaint, and is actually in a section title, right before point 68.

Exactly, which to say he's just a regular person not some savior who is capable of "saving us all" as the OP stated.

Your document retention policy should be included in your onboarding training and accessible to all staff, not doing this would cause all kinds of compliance problems.

>In its August 28, 2012 Complaint, the Commission alleged that, between 2005 and 2008, Wwebnet, Inc., a video software company, and Kelly made false and misleading statements and omissions to investors, including...

The accusations there are repeated and occurred over the course of several years. Musk has been accused of a single case of wrong doing. Musk's seems to be a much lesser crime. Also by still including the punishment in that search you are missing any similar accusations that received lesser or more severe punishments.

[1] - https://www.sec.gov/litigation/litreleases/2015/lr23177.htm

This is the Musk apologizing I'm talking about.

I mean, I might be proven wrong. But... showing off a couple of rage tweets in court to prove malice doesn't seem plausible to me. Would a Jury of 12 (and remember: all 12 have to agree) be convinced over a couple of "who likes short-shorts" tweets?

If a SINGLE jury member, 1 out of the 12, disagrees, then you get a hung case aka a mistrial. As per the rules of the DoJ investigation anyway. That's why I don't think the DoJ will go anywhere, because proof and evidence is at a way harder standard in a criminal case.

But the SEC is also seeking to remove him from the board of any public company. So he'd lose his chair and the CEO position in this single case.

Tesla's value is Musk's determination. Still, he needs to choose his actions more wisely, clearly.

Capital allocates to what is best for the markets, not what is best for the world. I can't breath shareholder returns. We can't wait for BMW and Toyota to cannibalize their internal combustion product lines with EVs because it's not financially convenient for them (runaway climate change, all that jazz [1]). Traditional manufacturers have no incentive to disrupt the status quo and instead, continue to churn out internal combustion vehicles.

“Yes, the planet got destroyed. But for a beautiful moment in time we created a lot of value for shareholders.” [2]

[1] https://www.theguardian.com/environment/2018/sep/26/global-w... ("World 'nowhere near on track' to avoid warming beyond 1.5C target")

[2] https://www.newyorker.com/cartoon/a16995

I follow the company closely, and have definitely seen some questionable behavior that seemed to be aimed at trying to create the negative news cycle for the business. Things like promoted reddit articles and a horde of bogus NHTSA complaints can be very damaging to the business' fundamentals.

But maybe there is more investigation into these things than I realize, and certainly the need to investigate this material doesn't negate the need to investigate Musk's own questionable conduct as well.

Elon is also an engineer first, that is needed at innovative companies, not some metric focused MBA C-level executive just looking to cash out. Musk actually cares about what he is building and has done a smashing job considering the pressure in my opinion. Tesla is made with love, a car/product people want, not just for the short term numbers.

That's pretty much any company (with certain variations for different industries).

"Jerome Guillen has been promoted to President, Automotive, reporting directly to me. In his new role, Jerome will oversee all automotive operations and program management, as well as coordinate our extensive automotive supply chain. Jerome has made major contributions and acquired deep knowledge of Tesla’s operations over the past eight years at our company, from being the first Model S Program Manager to managing all vehicle programs, then all vehicle engineering and worldwide sales & service. Recently, Jerome played a critical role in ramping Model 3 production, leading what almost all thought was impossible: creation of an entire high-volume General Assembly line for Model 3 in a matter of weeks. Before coming to Tesla, Jerome was responsible for creating and running the most successful semi truck program in history at Daimler’s Freightliner division."

[+] https://www.tesla.com/blog/company-update

Regarding the Roadster being "niche", it still looked like a normal car at least, unlike the EV 1, and any other electric car at the time. Furthermore, they had a roadmap to more affordable cars that still fit the moniker "normal". Other car companies were just running their EV projects as experiments, or as a way to appease California legislators to meet quotas, or simply retrofitting a non electric frame with batteries in a way that left much to be desired.

No one was trying to make a non-toy full electric car until Tesla.

Peter Thiel himself would tell you, that "he would never compete with Musk" [1]. He went on to say, in an interview with Rubin, "...after Paypal, Elon set off to start both the rocket company and the electric car company, Space X and Tesla, and I think the conventional wisdom about Elon was that if one of them succeeded, you'd have to question it, but when both of them succeeded, it suggests, you know, he knows something that other people don't."

I'm not going to comment on SpaceX. As CEO since 2002, Musk is instrumental in the operations of SpaceX, and ultimately the buck stops with him. [2]

As for Hyperloop, that was an idea that Musk put forward. I imagine that he would create a Hyperloop company, if he wasn't already CEO of two companies (SpaceX, Tesla) and core founder of a third (The Boring Company).

Tesla could die tomorrow and you would still have to call the company a huge success. 10 years ago, nobody thought that big oil's hold on the transportation industry would ever end. The establishment auto companies piddle paddled for decades with fuel cells [3]. Even by missing whatever bold milestones Tesla has ever set for itself, it has surpassed any other company's progress in producing oil-free autos. Now, it's within reach, and that's in no small part due to Tesla.

Sure, I suppose you can look at quarterly profit, if that's your sole metric for success. And I suppose a lot of bean counter types would look at that metric, but what I'm telling you is, if you only looked at metrics like that and raw odds of financial success...those same bean counter types would never, ever take the same risks that Musk took.

By the way, Amazon was criticized for years for never showing a profit, they kept re-investing their profits in their business [4]. And what they've transformed themselves into is a nearly unstoppable behemoth. That's because Bezos is a visionary, like Musk. And people like that, are not a dime a dozen. They're exceedingly rare.

[1] https://www.youtube.com/watch?v=h10kXgTdhNU [2] https://en.wikipedia.org/wiki/Elon_Musk [3] https://en.wikipedia.org/wiki/Fuel_cell_vehicle [4] https://www.ben-evans.com/benedictevans/2014/9/4/why-amazon-...

If toyota decides they can make a yaris or aygo as a purely electric vehicle, tesla will be nearly unable to catch that large, low end market segment.

Also, you need low-end, mass volume cars to be able to push eletric infrastructure and replace the current gas infrastructure. (although i think using hydrogen and reusing the gas infrastructure might even be a better solution personally).

Find me a Tesla owner that doesn't love their car.

Tesla is an engineering led product company first, both for the good of the environment and for making products that people love.

Not many could have built what Elon Musk built, if any others today at the time and survive the Great Recession or get people excited about the product.

Tesla has that excitement that nostalgic leaders like Disney, Ford, Jobs, 'World's Fair' type of innovative excitement had in the past.