Musk Faces U.S. Contempt Claim for Violating Accord with SEC
bloomberg.com
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He should probably find a way to exit as Tesla ceo, imo. Being a public company CEO doesn't suit him.
He built a car company from a cold start, made good cars, and pushed EVs forward by a good many years. We're now at the point where most major manufacturers make EVs. People are willing to buy them. Range is getting sufficient. Plans to start banning ICE cars next decade are getting serious.
Job done, and done well. Get a CEO that does platitudes to run Tesla.
Go do spaceX, boring companies, hyperloop... plenty of stuff to do. Plenty of money. Plenty of private investors willing to fund muskco projects.
This Elon Musk Vs the stock market stuff is not going to be fun for anyone.
> In fairness, musk is obviously contemptful of the sec
Being contemptful of the sec (or even the justice system) isn't a crime, despite the name "contempt of court" means "disobeying a court order" not "being contemptful". Thought crime isn't a thing.
I'm 99% sure that this is a joke and the original commenter doesn't think having contempt for the SEC is a crime
Also, I was just writing it because it sounded good att.
This made me think: many cities already ban cars from their centers, but perhaps a better policy would be to ban ICE cars? Air quality and noise levels could improve dramatically, but the impact on commerce wouldn't be as harsh perhaps?
In addition, the policies against car are not only pollution related but quality of life related and urbanism. This is why in many places in Europe you can't build open air parking in cities anymore, it just takes too much of the public space and if yoj want life in the cities you need to be able to walk easier.
This isn't true for me. Maybe it depends on the strength of regen in your car, but 90% of my deceleration when stopping is handled by regen. I only use brakes under 5 MPH in most circumstances. And I wouldn't say I'm a timid driver.
I know that Tesla's have aggressive regen, I own one, but it doesn't bring you to a complete stop so you're using brakes at every full stop.
...blind people exist.
Lots of stuff to solve there. They need to optimize falcon 9 reusability (24hr turnaround is possible), get starlink up and running, Starship and booster development, ISRU development for Mars.
Musk is quite clearly a "like"-addict (public adulation addict, really), and those problems sound like long stretches of boring work that doesn't put cameras in his face or likes on his tweets.
This is probably what happened. In a private company the CEO might get some egg on their face, but that's it. In a public company this could be illegal.
Elon is not the type of person who functions well in the heavily bureaucratized and regulated type of environment.
BTW I am not totally letting him off the hook, just saying that maybe staying away from environments like the public stock markets is a good idea if you don't want a bureaucratic culture.
A couple of major points:
One, Tesla is not a private company. They are a public company with an actively traded stock. The price of the stock moved significantly based on this information being revealed, and people who were short might have been subjected to margin calls causing them to close out their position, and new longs might have invested in the stock on the assumption that an acquisition at $420 a share would take place. This people have real harm due to Musk's irresponsibility, and they are exactly the kind of people the SEC exists to protect.
Two, you say that is probably what happened very confidently here without any evidence. There isn't a single investor that has come forward and said that they were the one planning to facilitate this transaction, which is surprising, because the universe of institutions that can fund a $50 billion buyout is incredibly small. Most likely whatever Musk might have been referring to in his infamous "funding secured" tweet was even less material than you describe.
Three, I would also describe this as irresponsible and unethical in a private company as well. If you started telling your employees that their shares are worth $420 a share and will soon be as good as cash, then one of them decides to buy a house on the knowledge that his net worth can take the added mortgage relatively easily, you should feel bad about misleading them.
> BTW I am not totally letting him off the hook, just saying that maybe staying away from environments like the public stock markets is a good idea if you don't want a bureaucratic culture.
There have been plenty of innovative CEOs who have existed in public companies. I don't think "don't tweet out securities fraud" is really too high a hurdle for someone to meet that it will impede the innovation at their company.
It will be interesting to see the compromise he might be willing to take
That's one perspective, and the other perspective is that despite his public company CEO flaws, he's still overall very suited. I don't personally know which of the two is truer. Most HN readers probably aren't in a position to know if someone is a good public company CEO, maybe you are. But it seems worth noting that saying that someone isn't suited from their job likely comes from a position of knowing far less about what it means to be suited at their job than they (Musk) know, with the exception of the highly public aspects of their job.
So most people can say that he doesn't seem that suited at the highly public aspects of being a public company CEO, but he may be so well suited to the other aspects that those aspects massively dominate, making him overall an excellent public company CEO.
"... the offense of being disobedient to or disrespectful toward a court of law and its officers in the form of behavior that opposes or defies the authority, justice and dignity of the court"
now that's kind of a mix of breaking the rules and being a general dick, but the point is that to respect the intent institution you need to both respect its judgements and its identity. Musk may or may not be violating the former but is definitely failing the later.
You may not agree with this but that's how our institutions work. As for "thought crime" that doesn't apply once you open your mouth and share it with everyone else.
Apart from the first amendment, I think your missing the "and" in your quote. It's required that you "oppose or defy" the "authority of the court"... I.e. violate an order.
PS. The SEC is not the courts. Musk has been rather clear that he does in fact have respect for the courts...
Edit: And to be clear I'm not saying Musk isn't guilty of contempt of court, is just has nothing to do with being contemptful of the SEC (except perhaps his motive).
FWIW Musk was an A round investor who took over as CEO after the founder was fired a few years later.
"You can’t put Elon Musk in jail; he has a whole company for drilling tunnels! Let’s be fair to Musk: On the one hand, absolutely, he has been going around saying that he does not respect the law and is going to ignore the SEC and a court order, but on the other hand he has also been going around saying that he’s got a big drill. Also rocket ships, submarines, flamethrowers, possibly flying cars, basically the whole arsenal of supervillain technology. The message is not just “I do not care about the law”; it is also “and you can’t stop me bwahahaha.”
Or Tesla is in no danger. Musk still might be.
Tesla is in the business of selling luxury products. They live or die by people wanting to buy them. Musk's twitter account appears to be one of the primary marketing channels.
SpaceX is in the business of
- Getting regulatory approvals
- Acquiring engineering talent cheep.
- Selling things to taxpayers and rich people
They live or die by politicians and potential hires liking them - billionaires who want a trip to the moon help too. Like with Tesla Musk's twitter account is one of the primary marketing channels.
Don't think he's the only one doing this, here is Tory Bruno (ULA CEO)'s reddit account: https://www.reddit.com/user/ToryBruno/comments/
I understand your points. I don't think any of his companies would suffer if he wasn't the one making announcements. Stop talking about production. Hype all of the cool revolutionary tech you create all you want - just don't attribute it or mention the business side of things, especially when they are speculative. State facts, after they are facts..."we said it would be x production for 2019, and well, here we are at the end of the year we blew that away!!" or something factual.
If he doesn't get a handle on it, he will lose it. That won't be good for anyone, except for competitors.
I don't think Elon's use of Twitter is as useful of a tool for him in 2019 compared to when he started. There is plenty of buzz about his companies.
I have tremendous respect for him. I absolutely don't want to see him fail, or see it fail because of something trivial like not being able to stop yourself from tweeting certain things that are off limits. There's too much on the line.
Operator
Thank you. Our next question is from Colin Rusch with Oppenheimer.
Colin Rusch
Thanks so much. Can you talk a little bit about the geographic dispersion for the guidance for 2019, where you're expecting the Model 3s to sell through as well as the other models?
Elon Musk
Well, I think we did, actually. Yes, it's clear in our letter.
Deepak Ahuja
We indicated in Q1, we will start delivering Model 3s in Europe and China. And we also shared a chart showing the potential market size for midsized premium sedans in North America, Europe and Asia, suggesting those markets could be even bigger. So I think that gives a good sense of where we'll be. And we'll launch the right-hand drive version at some point to go to the other markets.
Elon Musk
Yes. Maybe in the order of 350,000 to 500,000 Model 3s, something like that this year.
Is there a fine? For him and the company? Does he get removed from the board? I don't think jail is likely but, maybe?
(I got "We've detected unusual activity from your computer network" with a captcha.)
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Analysts were generally projecting 400k cars delivered. Musk, the CEO, the ultimate insider, suddenly reveals that Tesla will sell 25% more cars than people outside expected. I think it's fair to say that if that came as a press release from the company, the mix of information certainly would have changed and people would buy the stock.
The SEC agreement was that he would pre-clear any material tweets with a lawyer. He said in a TV interview that he wouldn't get his tweets pre-cleared, and said "I want to be clear. I do not respect the SEC. I do not respect them.” And then he tweeted material information on Tesla.
I think it's pretty fair to call that contempt of court!
The definition of materiality you provided clears him as the numbers Musk tweeted are in the their quarterly report, so nothing new was learned.
"Materiality" is weird, I agree! Matt Levine has a running line that "everything is securities fraud" these days.
To be clear, he is in contempt of the court order around materiality. In general, not matching what analysts say isn't contempt of court, of course.
> The definition of materiality you provided clears him as the numbers Musk tweeted are in the their quarterly report, so nothing new was learned.
I do not agree. The quarterly report says "our goal is to be able to produce 10,000 vehicles per week on a sustained basis. Barring unexpected challenges with Gigafactory Shanghai, we are targeting annualized Model 3 output in excess of 500,000 units sometime between Q4 of 2019 and Q2 of 2020."
The tweet said "“Tesla made 0 cars in 2011, but will make around 500k in 2019.”
Those are very, very different statements! Musk's tweet indicates dramatically higher production at the end of 2019.
This is about whether or not he intentionally crossed an arbitrary line by vaguely restating previous official company statements in an unofficial manner without complying with company policy on said utterance.
It sounds like you think "contempt of court" shouldn't matter. I think it should. It's hard to have a society with rule of law if people ignore court orders, even cool people like Elon.
My guess is that the SEC's definition and the court's definition will not agree.
Before disagreeing with this, go back and read the terms of the original settlement. A lot of people are talking smack (on both sides) about things that aren't even in that agreement.
The other stuff, like about the TV interview, is evidence that he's not acting in good faith, so the court shouldn't cut him slack here - or, in the motion's words, that he "has not made a diligent or good faith effort to comply with the provision of the Court’s Final Judgment requiring pre-approval of his written communications about Tesla. Less than two months after the Court entered its Final Judgment, Musk publicly indicated that he was not serious about compliance with this provision."
Is it though? Personality types are not something that changes with age. Maybe it gets toned down or more mellow with age, or it could get more extreme as they become more comfortable/confident in doing what ever trait it is. Pre-social, it might have only been notice by those in direct contact with an individual. Now, it's made visible to the entire online world. Musk is still younger than Trump, and he's not slowing down at his age either.
I can see arguments to both sides. If anything though in the modern world of social media and the public's thirst for transparency, these kinds of stories can be seen as just an additional thing to think about before going public (obviously a very minor thing of course when making the decision, but still notable).
The guy went onto national television, implied he would not follow the court order, said he does not respect the SEC, then went ahead and broke the order. How is this even debatable?
And let's not pretend that Tesla isn't already under scrutiny for absurd forecasts (under the guise of uncertainty) that they do not reach.