Elon Musk Sued By Sec

Tesla Inc. Chief Executive Officer Elon Musk was accused by the Securities and Exchange Commission of misleading investors when he tweeted that he had funding lined up to take the company private.

Shares fell about 10 percent in after-hour trading on news of the lawsuit. 

"Am considering taking Tesla private at $420. Funding secured." - Elon Musk

As @Tom Kirkman would say "Lawsuit Secured" 

https://www.bloomberg.com/news/articles/2018-09-27/elon-musk-is-sued-by-securities-and-exchange-commission-docket-jml0ca0m

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And lets not forget that the DOJ is also investigating.

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Elon's coming fall from grace should be a pretty spectacular circus to watch.

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And that shoe has dropped. Stock down nearly 12% after hours. OUCH!!! I am waiting to see how the 'true believers' respond. Half of the fans just love Musk, not the tech. If he gets pushed out ... will they still? Saw one interview with the BBC where a former SEC guy suggested he would get demoted and be issued a Twitter Nanny.

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Was having a chat with Rodent the other day about how this stuff is all cool in the movies. It's easy to love Tony Stark in the movies, but in real life, we would hate him. Musk thinks he's in a movie. 

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2 minutes ago, TraderTate said:

Was having a chat with Rodent the other day about how this stuff is all cool in the movies. It's easy to love Tony Stark in the movies, but in real life, we would hate him. Musk thinks he's in a movie. 

indeed. Stark is the sexy hero you love to love in movies, but if you had to live with that spoiled ADHD-riddled manchild in real life you'd set his stuff out on the curb and set it ablaze while he pulled his umpteenth Adderall-fueled all nighter at work. 

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Elon reloading his footbullet gun, aiming for his other foot now.  Show will resume after Elon's bong break.

Musk Tore Up Last Minute SEC Settlement, Decided To Fight Instead

The SEC had crafted a settlement with Mr. Musk—approved by the agency’s commissioners—that it was preparing to file Thursday morning when Mr. Musk’s lawyers called to tell the SEC lawyers in San Francisco that they were no longer interested in proceeding with the agreement, according to people familiar with the matter. After the phone call, the SEC rushed to pull together the complaint that it subsequently filed, the people said.

Considering that this is an open and shut case, one wonders if Musk was once again on drugs when he decided that instead of settling, he would fight the charges. 

... the reason why the SEC is confident it will win is simple: Musk lied with the clear intent to not only boost the stock price but - and this is the truly criminal part - to "punish" the shorts.The SEC said that contrary to the statements he made in several Twitter messages on Aug. 7, Musk “knew that he had never discussed a going-private transaction at $420 per share with any potential funding source.” The agency said the statements and omissions of fact caused disruption to the market for Tesla shares—which rose more than 10% the day of the tweets—and harm to investors especially the bears. After all, Musk has been fighting a war against short sellers for years.

... The SEC said in its complaint that “Musk stated that he rounded up the price to $420 because he had recently learned about the number’s significance in marijuana culture and thought his girlfriend ‘would find it funny, which admittedly is not a great reason to pick a price'."

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1 hour ago, Rodent said:

indeed. Stark is the sexy hero you love to love in movies, but if you had to live with that spoiled ADHD-riddled manchild in real life you'd set his stuff out on the curb and set it ablaze while he pulled his umpteenth Adderall-fueled all nighter at work. 

Ouch!

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10 hours ago, Adam Varga said:

And lets not forget that the DOJ is also investigating.

Hi Adam.  What is the DOJ business all about?

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So, the question now is: Is this good news or bad news for an investor in waiting, short or long?  It's easy to see why the stock would dive immediately, but will that develop into a downward trend or will the stock recover and climb?  That may depend, I suppose, on who takes charge of ironing out Tesla's production and delivery problems, but I can see the stock rising on the sentiment of the great disruptor being sent to the nursery and people with proven records being installed or promoted from within.

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1 minute ago, Dan Warnick said:

...... but I can see the stock rising on the sentiment of the great disruptor being sent to the nursery and people with proven records being installed or promoted from within.

That presumes that there is anybody left "with proven records."   How many have fled so far?  

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4 minutes ago, Jan van Eck said:

That presumes that there is anybody left "with proven records."   How many have fled so far?  

And those departures were highly visible.  I can see groups of investors rounding up a whole team of those people and putting them back at the helm of day to day operations.  I would buy shares on news of that happening, because I'm betting we haven't seen the half of what these people, and select other outsiders, could do with the foundation that has already been laid.  Heck, even I can see that the biggest things they need to do are to implement an iron clad quality system, get their production under control and consistent, bring suppliers in-house to "live" the production and forecast future spare parts sales, and start maintenance agreements with outside parties.  The value of the company needs to come down to reality, but it can do so over time and by various stock actions that don't unduly punish shareholders.  I think Tesla could go on and prosper without Tony at the helm.

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Readers may wish to digest the news that the SEC is seeking "removal" of Elon Musk from management of Tesla.  And they can do that, as Tesla is a Public Company.  

Although Elon owns some huge chunk of the shares, perhaps 30%, I dunno the exact number, that does not guarantee that he is the boss.  That is up to the SEC and if they want to remove you, they file suit and ask for relief in part by removal, and probably some money penalties as well. It starts to look like the government overseers have finally lost patience with Elon and his craziness. 

Personally, I think that if Elon is removed, the True Believers will sell their shares.  At that point, the shorts will clean up, as the stock will crater.  Nobody is going to blindly buy up all the shares of the Faithful, not at $301, when it was $151 only three years ago.  What has happened inside Tesla that would qualify a doubling of the stock?  That Elon showed off his so-called long-haul truck?  The one that will never get built? 

The final value of this stock will be in the single digits.  Somewhere around $6.50. 

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How much debt does Tesla have?  There could be serious secondary repercussions in that area if it as large as I assume it is.  Some folks on Wall Street are going to lose their bonus checks.  Boo-hoo!  Crooks.

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34 minutes ago, Jan van Eck said:

That Elon showed off his so-called long-haul truck?  The one that will never get built? 

Is the truck really dead?  That thing looks awesome and from the presentations I've seen online it looks like it performs extremely well.  Sad if it never hits the roadways.  

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4 hours ago, Dan Warnick said:

Hi Adam.  What is the DOJ business all about?

DOJ has a case open too which might be by referral because the SEC felt there was strong enough evidence for criminal charges to be levied. The DOJ investigation , which is separate from this SEC case,  is the only one that can result in jail time. DOJ also has a harder job to prove malice though while SEC doesn't need a bulletproof case, they just need a strong case to get their weaker penalties enforced. 

The SEC filling, paragraph 79 indicates malice: 

"Defendant, with scienter, in connection with the purchase or sale of securities as set forth above, directly or indirectly made untrue statements of material fact and omitted to state material facts necessary in order to make the statements made..."

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Every board would ask the executive to be removed pending the lawsuit. Well, everyone except Tesla and its board of directors. 

“Tesla and the board of directors are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful U.S. auto company in over a century. Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees,” Tesla board said in a statement. 
 

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I am having trouble understanding why anyone would invest in anything this guy does, he is obviously somewhat unstable. God only knows what he is planning next, or maybe that is the problem, he doesn't plan, he just follows his impulses and no one has ever bothered to try to reign him in for the sake of his businesses. Kinda like someone else we all know, huh? I wish that guys Twitter account would just self destruct....lol.

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25 minutes ago, BlackTortoise said:

Every board would ask the executive to be removed pending the lawsuit. Well, everyone except Tesla and its board of directors. 

“Tesla and the board of directors are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful U.S. auto company in over a century. Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees,” Tesla board said in a statement. 
 

The Tesla Board's attorneys said, more likely.  They are trying desperately to save their own butts.  This could get ugly for a lot of people who are guilty of nothing more than trading in their lives to make this company work.  That sucks and Elon should give all of them a fat bonus check right out of his fortune.  And then get out of the way and let someone else push it through, but he won't because of IRANIAN SANCTIONS!  Er, I mean because of his ego.

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21 minutes ago, SERWIN said:

I am having trouble understanding why anyone would invest in anything this guy does, he is obviously somewhat unstable. God only knows what he is planning next, or maybe that is the problem, he doesn't plan, he just follows his impulses and no one has ever bothered to try to reign him in for the sake of his businesses. Kinda like someone else we all know, huh? I wish that guys Twitter account would just self destruct....lol.

Oh I don't know.  Howard Hughes was just about as bat-(poop) crazy/eccentric as Elon, if not more.  I did a thesis on Howard in college and he was single-handedly responsible for a lot of technological solutions and inventions that pushed aviation and other industries far past what the norm was at the time.  We need dreamers, no doubt about it.  They push us past existing norms and open our eyes to what's really possible.  I don't know for sure, but before Elon there wasn't the same worldwide push for electric autos, was there?  That's not a bad thing, a lot of people are ready for these kinds of cars right now, whether they are a tad inconvenient or not.  BUT, sometimes the dreamers have to step aside and let the technical people get on with it after a point.  I think that's where Tesla is now.

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3 hours ago, Dan Warnick said:

Oh I don't know.  Howard Hughes was just about as bat-(poop) crazy/eccentric as Elon, if not more.  I did a thesis on Howard in college and he was single-handedly responsible for a lot of technological solutions and inventions that pushed aviation and other industries far past what the norm was at the time.  We need dreamers, no doubt about it.  They push us past existing norms and open our eyes to what's really possible.  I don't know for sure, but before Elon there wasn't the same worldwide push for electric autos, was there?  That's not a bad thing, a lot of people are ready for these kinds of cars right now, whether they are a tad inconvenient or not.  BUT, sometimes the dreamers have to step aside and let the technical people get on with it after a point.  I think that's where Tesla is now.

Howard Hughes may have been a little eccentric, but he didn't have Twitter that could instantly damage his reputation. Back then he could keep people around that would "clean" things up before they bacame a major scandal. Today it is instantaneous, push sned and a couple seconds later you have built an instant case for the SEC, or the FTC, or the FBI....lol.

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4 hours ago, BlackTortoise said:

Every board would ask the executive to be removed pending the lawsuit. Well, everyone except Tesla and its board of directors. 

“Tesla and the board of directors are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful U.S. auto company in over a century. Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees,” Tesla board said in a statement. 
 

I guess Tesla's Board Room must be filled with the funny smoke too!

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4 hours ago, Dan Warnick said:

Oh I don't know.  Howard Hughes was just about as bat-(poop) crazy/eccentric as Elon, if not more.  I did a thesis on Howard in college and he was single-handedly responsible for a lot of technological solutions and inventions that pushed aviation and other industries far past what the norm was at the time.  We need dreamers, no doubt about it.  They push us past existing norms and open our eyes to what's really possible.  I don't know for sure, but before Elon there wasn't the same worldwide push for electric autos, was there?  That's not a bad thing, a lot of people are ready for these kinds of cars right now, whether they are a tad inconvenient or not.  BUT, sometimes the dreamers have to step aside and let the technical people get on with it after a point.  I think that's where Tesla is now.

Yes we need "Dreamers" (LEGAL) (LOL), seems like his dreams are going up in smoke!!!

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9 hours ago, Dan Warnick said:

Is the truck really dead?  That thing looks awesome and from the presentations I've seen online it looks like it performs extremely well.  Sad if it never hits the roadways.  

Just to clarify, the truck is unworkable as configured. It has a number of problems (including available payload on the drive axle pair) and a big logistical problem, in that it has to be re-charged when not running.  And that is when it is sitting in the customer's loading dock, with the trailer getting loaded or unloaded.  That implies that the customer is going to go spend the money to install the charger machinery, and the power coupling to flow the power need to do a recharge, all on their own dime, and then try to figure out how to charge the trucker for the juice.  The customer is not going to do that.  So that implies that the truck has to take time out from working to go sit at some recharge facility, or back at its own depot, in order to recharge.  Trucks only make money when the wheels are turning, so how do you allocate the lost productivity of a very expensive tractor vehicle?  And you cannot. 

So the idea that these long-haul Over-the-road tractors are going to become electric remains outside the realm of probability.  The business model for that is not developed. You might be able to develop a business case for some Class 4 and Class 5 trucks; for a Class 8 OTR tractor, not likely.  It is my conclusion that Musk's hoopla unveiling was to boost stock price, confound the shorts, and distract the media from the cash problems with his auto production. 

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3 hours ago, Jan van Eck said:

Just to clarify, the truck is unworkable as configured. It has a number of problems (including available payload on the drive axle pair) and a big logistical problem, in that it has to be re-charged when not running.  And that is when it is sitting in the customer's loading dock, with the trailer getting loaded or unloaded.  That implies that the customer is going to go spend the money to install the charger machinery, and the power coupling to flow the power need to do a recharge, all on their own dime, and then try to figure out how to charge the trucker for the juice.  The customer is not going to do that.  So that implies that the truck has to take time out from working to go sit at some recharge facility, or back at its own depot, in order to recharge.  Trucks only make money when the wheels are turning, so how do you allocate the lost productivity of a very expensive tractor vehicle?  And you cannot. 

So the idea that these long-haul Over-the-road tractors are going to become electric remains outside the realm of probability.  The business model for that is not developed. You might be able to develop a business case for some Class 4 and Class 5 trucks; for a Class 8 OTR tractor, not likely.  It is my conclusion that Musk's hoopla unveiling was to boost stock price, confound the shorts, and distract the media from the cash problems with his auto production. 

Not feasible at this time or in the near future , unless they build special roads with electric power supply like the electric trains but that will be very expensive, then defeats the purpose of having an electric semi to do long haul transportation. Most of his actions were smoke and screen acts to bedazzle the investors and lure in new suckers to keep funding his billionaire lifestyle and dream and if it wasnt for the gov funded and taxpayer $ wasted sham, he wouldnt be anywhere!

Offloaded all stocks  when his antics started getting more bizarre and the start of the meltdown. Space rockets, hyperloop, flame throwers, smoke rings ? common sense and business intelligence dictates that no matter what, focus on the one thing, electric cars and make it a success, it is OK to diversify and explore other opportunities when you have atleast the main goal down perfect if not close to perfect in terms of sales, supply, quality, revenues, profits, reliability etc

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