Elon Musk got off lightly – Tesla is damaged
There will be, from the fan boys, screeches and wails of discrimination over this decision to fine Elon Musk. They’ll be right too, this is discrimination, wholly in favour of Elon Musk and Tesla. For he most certainly did mislead the markets, a serious financial crime, and there’s a very good argument that he should have been punished much more than he was. The Securities and Exchange Commission could have insisted that he entirely remove himself from the management of a listed company – that would have been extreme perhaps but it was possible.
Elon Musk: trust me I’m a car dealer
As has been pointed out before, Musk should have been punished for what he did:
Insofar as (a) is concerned: LSD? Lack of sleep? Impending mental breakdown? Or was there something more desperately Machiavellian about it? Regardless, I can’t think of an explanation that bodes well for Tesla.
With regards to (b). It is so blindingly obvious now (and should have been from word one) that his announcement Tweets were materially false. They had large impacts on the price of Tesla stock. They followed years of other dubious announcements, both on Twitter and in SEC filings and investor disclosures. If the SEC lets this slide it will make a mockery of the securities laws, and suggest that there are different standards for some people.
So, what really is that he did? Well, his actual tweet was along these lines:
The fraud allegation relates to his August tweet in which Mr Musk said he was considering taking electronic car maker Tesla off the stock market and into private ownership.
He wrote he had “funding secured” for the proposal, which would value Tesla at $420 per share. Shares in the company briefly rose after his announcement, but later fell again.
Effectively, he announced that someone was going to buy all Tesla shares at that $420. This, not unsurprisingly, made the price of Tesla shares rise to close to that $420. The problem being that it wasn’t true, he didn’t have a buyer. That’s misleading the markets.
Elon Musk, the billionaire technology entrepreneur, will step down as chairman of the electric car company Tesla and pay a £15 million fine to settle fraud charges.
And that’s the punishment. But there are those who think it’s a pretty light one:
Elon Musk just dodged a bullet. It’s Tesla that bears the scars.
Just a couple of days after the Securities and Exchange Commission sued Tesla Inc.’s chairman and CEO – an action he described as “unjustified” – Musk has settled. Without admitting wrongdoing in connection with his bizarre claims of having teed up a buyout of the company in August, Musk will pay a fine of $20 million and relinquish the position of chairman for at least three years.
Given the apparent strength of the SEC’s complaint, with so much evidence typed and broadcast by Musk’s own hand, this surely counts as a win for him. The fine is immaterial compared to the $8.9 billion value of his stake in Tesla. Crucially, he has avoided the ban on being an officer of a public company, as the SEC was seeking.
It could have been so much more and it wasn’t – yes, that’s a win. Well, a win after having done something so ridiculously stupid as having sent the tweet in the first place.
Posted: 1st, October 2018 | In: Key Posts, News, Technology Comment | TrackBack | Permalink
