19 ms·

Tesla Faces U.S. Criminal Probe Over Musk Statements

339 points by whatok 8y ago

minimaxir 8y ago
Notably, this now involves the DOJ, not just the SEC.
- tomatocracy 8y ago
  That's likely because the SEC does not have the power to undertake criminal prosecutions.
HelloFellowDevs 8y ago
I'm assuming non libel related statements and company related statements only.
harryh 8y ago
There are a lot of things to respect about Musk. But he lied on twitter in a direct effort to cause financial harm to people shorting Tesla stock. You can't do that. He should go to jail.
- beaconstudios 8y ago
  > But he lied on twitter in a direct effort to cause financial harm to people shorting Tesla stock. Do you have evidence of this, or is it speculation?
  - tomc1985 8y ago
    If you read his rants/tweets around this time it is pretty clear he is has it in for short sellers
    - 32847yjo87tj 8y ago
      That much is not illegal.
      - Asparagirl 8y ago
        But it provides motive.
  - harryh 8y ago
    The "lied on twitter" part is now clear. He said he had funding secured for a buyout at $420 which he has now basically admitted was not true. The "cause financial harm to people shorting Tesla stock" is a bit of speculation but it seems basically obvious to all observers.
    - beaconstudios 8y ago
      > but it seems basically obvious to all observers. It doesn't seem obvious to me. It seems like one of a few interpretations, not limited to: - Elon was overly stressed (as has been documented recently) and didn't think before posting such an impactful statement - He considers twitter to be an official outlet for Tesla and just continued with his tendency to publicise his decisions and thought process constantly. - His idea of "secured" is simply different from the SEC definition and if the funding had been SEC-secured, the tweet would be a compliant form of public disclosure. [edit] To be clear, I'm not arguing that the tweet shouldn't be investigated. I'm saying that "he intentionally lied to screw over short sellers" is presumptive and that may not have been his intent.
      - chooseaname 8y ago
        So, anyone can get away with a crime if they're overstressed? or just Elon? > His idea of "secured" is simply different from the SEC definition ... He is the CEO. He's not allowed to have a different definition. Words mean things. That's how we communicate.
        beaconstudios 8y ago
        > So, anyone can get away with a crime if they're overstressed? Are you putting words in my mouth on purpose? I'm not arguing that he shouldn't be investigated. I'm arguing that "trying to screw over short sellers" is not the only and "obvious" reason why he could have made the tweet.
        emodendroket 8y ago
  - rigsby50 8y ago
    Are you saying he bought Twitter at $420 and the funding was secured for it? Because that sounded like an outright lie. He also doubled down by making that blog post thereby voicing this in his capacity as Tesla CEO. It wouldn't be illegal if there was a tender offer for the shares at $420.
- atonse 8y ago
  As sad as this makes me (because I want Tesla to be wildly successful), I have to agree. This is textbook and brazen stock manipulation, a flat out crime.
  - crankylinuxuser 8y ago
    Isn't "Opening a civil and criminal investigation" without due process, also direct manipulation as well? Surely, prior to a fault/guilty verdict, running someone through the mud is furtherance of that, no? This reminds me of "perp watches" posed by police departments on Facebook and twitter. No charges, but arrested - and you get to live in the newspaper and social media regardless if you are exonerated. Cause, public shaming? edit: s/peep/perp/
    - jchw 8y ago
      A criminal investigation being opened is literally part of due process.
      - pathseeker 8y ago
        The big announcement is what OP is referring to.
        aaomidi 8y ago
        The big announcement is part of transparency and keeping the US government accountable. There is simply no other way, the only reason this is a big announcement is because Elon is very active on social media.
        _jal 8y ago
        Allow me a moment to note the irony of complaining about big announcements in this context.
        jchw 8y ago
        I must've missed something, what I understood from reading the article was simply that there are insider reports of a criminal probe, not that the U.S. government made an announcement of such.
- ConfusedDog 8y ago
  Why is it a lie? Saudi did not invest Lucid when he posted the twit. You don't know that funding was not secured. As a matter of fact, if the board supported the decision, it would have been Tesla being invested. The statement itself is not necessarily a lie (could be) but it seems to me likely not.
  - whatok 8y ago
    Did you read the statement he put out? He basically said everything was a lie.
    - ConfusedDog 8y ago
      He you mean Elon Musk? He admitted the funding was not secured at the time and was never intended to buy back stock at $420? Why not post a link and let us see.
      - gamblor956 8y ago
        He actually did admit that funding was not secured to buy the stock back for $420. https://www.tesla.com/blog/update-taking-tesla-private https://www.tesla.com/blog/update-taking-tesla-private In the post, he also admits that the Saudi Arabian investment would only provide a small fraction of the necessary amount needed to go private.
        dragontamer 8y ago
        That's DAYS after Musk made the initial "Funding Secured" tweet. https://twitter.com/elonmusk/status/1026872652290379776?lang=en https://twitter.com/elonmusk/status/1026872652290379776?lang... Follow the original twitter feed yourself. Its not like its been deleted. Musk is very clear that "funding is secured", and in follow up tweets. > Am considering taking Tesla private at $420. Funding secured. > Shareholders could either to sell at 420 or hold shares & go private > My hope is all current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment. ---------- Days later, Musk posts a blogpost that directly contradicts his original tweets. IE: He was lying originally. We now know that there's no buyer who was willing to spend $70 Billion to buyout Tesla and take it private. The question then, is was this lie "negligence" (SEC fine), or was it intended to manipulate the price? (FBI jailtime). The DoJ case implies the FBI is looking into the jailtime question. While the SEC is looking into the negligence question. Both cases will move forward as appropriate. My bet is that SEC gets him on negligence, but I don't really know enough about history / other cases to know what kind of punishment Musk will get. I'm guessing a fine of some kind, but the SEC does have the power to remove Musk from his CEO position entirely.
- 32847yjo87tj 8y ago
  Except he didn't lie. Funding was secured. So much so that when shareholders objected and Musk retracted, the Saudi wealth fund went out and invested substantially in a Telsa competitor. This is all drama for drama's sake.
  - camjohnson26 8y ago
    A $1 billion investment isn't even close to what it would have cost to take Tesla private at $420.
  - rootusrootus 8y ago
    Guess we'll find out. He'll have documentation for the feds, and then they will not charge him with a crime.
- abalone 8y ago
  This is a massive oversimplification. Musk may be in peril but this is not as cut-and-dried a case of fraud like you make it seem. Consider this recent comment from the SEC: “When you talk about fraud,” [Jina Choi of the SEC] answered, “you’re talking about a state of mind, you’re talking about mens rea. We call it scienter. You have to do something with intentionality. The idea of just making a misstatement doesn’t necessarily rise to the level of fraud." Misstatements can “be the first step to fraud,” Choi had added. “But generally, when we talk about fraud the F word, I think we are talking about a state of mind that’s a little bit higher than that.”[1] That telegraphs a pretty lenient stance on misstatements that aren't completely fabricated. And there were actual serious negotiations happening here. That's not in dispute. Without question, Musk made a misstatement. But what was his state of mind? Was there intent to deceive, or was he merely overzealous in his interpretation of the negotiations? If he can argue the latter then it may not rise to the level of criminal fraud. [1] https://techcrunch.com/2018/09/13/a-tesla-investor-says-he-was-recently-questioned-by-u-s-regulators-about-that-infamous-funding-secured-tweet/ https://techcrunch.com/2018/09/13/a-tesla-investor-says-he-w...
  - JumpCrisscross 8y ago
    > That telegraphs a pretty lenient stance on misstatements that aren't completely fabricated American commercial law goes out of its way to avoid criminalizing stupidity. At a certain level, the difference between a genius and a madman is the genius was correct. They are indifferentiable without the benefit of hindsight. The nail in Elon's coffin (or lack thereof) will probably revolve around the degree to which he documented his animus towards short sellers in the days leading up to the misstatement.
    - abalone 8y ago
      Nah, it's clear Musk hates short sellers. That's not the issue. Nor is his desire to hurt them. The question is whether he had scienter when misstating the finality of the deal he was negotiating.
      - JumpCrisscross 8y ago
- na85 8y ago
  This. I'm sick of people giving high-profile people in the tech sector a pass on their shitty behaviour because of the pervasive hero-worship culture. Jobs, Zuck, Torvalds, etc. Irrespective of Musk "caring too much" or whatever other justification his fans have concocted, this is exactly the sort of behaviour (lying to manipulate the market) we have laws to prohibit. We see articles every so often about how Tech as an industry needs to play catch up on the Ethics side of things. Now's the chance.
chollida1 8y ago
The sad piece of karma in all of this is that Musk tweeted in an effort to destroy the shorts. His tweet turned out to: - give the shorts a big dip in his stock, - an investigation by the SEC - an investigation by the DOJ - the backing off of a deep pocketed investor in the Saudis - Him potentially being personally liable, which would mean having to step away from SpaceX and Tesla if he was found guilty of fraud. This could be the biggest thing to come out of all of this. Imagine Elon getting a 2 year ban on begin an executive in a company. Or SpaceX not being able to bid on government contracts because their CEO is a felon. There is going to be a lot of backroom dealing to do everything they can to prevent Elon from being charged. - A lawsuit that is seeking class action status for anyone who was short at the time of his tweet. - this is speculation, but it must have really strained his relationship with the board. I mean you can only fight so many battles at once, you'd think you'd want to have the board on your side All to screw with the shorts, who really have no power what-so ever to hinder Telsa. If he had just not used twitter he and Tesla would be better off and the shorts would be worse off.
- TAForObvReasons 8y ago
  > All to screw with the shorts, who really have no power whatso ever to hinder Telsa. If Tesla wasn't burning through cash and didn't need an ever-inflating stock price in order to keep the house in order, the shorts would be powerless and in all honestly would back off. The only reason the shorts have power is that Tesla's future is currently heavily dependent on its stock price.
  - beaner 8y ago
    Can you explain how that works? I thought that once a company's stock was listed, third parties just trade it amongst themselves. How does that activity affect Tesla in terms of how they're able to execute?
    - romed 8y ago
      Public companies can raise money through "secondary" offerings of stock. That's why an IPO is called an "initial" offering.
mrindividual 8y ago
Why? Does Jeff Sessions not like the weed reference?
someonelse17 8y ago
Why? does Jeff Session not like the weed reference? There is no call for a criminal probe her.
scotchio 8y ago
Another day, another excited slam piece headline against Tesla. Tesla's Nov 7 Earning Report must be good... In all seriousness, no idea what Elon was thinking with that Tweet. Gut says, long term Tesla will be fine and little will to come of this investigation.
- dsfyu404ed 8y ago
  >Gut says, long term Tesla will be fine and little will to come of this investigation. Or this could be their DeLorean moment. People's guts are notoriously bad at predicting the future.
  - PakG1 8y ago
    Out of curiosity, what was the DeLorean moment? I know DeLorean didn't succeed in the long term. But what was this "moment" you're talking about? Google gave me nothing.
    - hfdgiutdryg 8y ago
      Probably DeLorean's attempt to traffic cocaine in order to keep the company afloat: > On October 19, 1982, DeLorean was charged by the U.S. government with trafficking cocaine following a videotaped sting operation in which he was recorded by undercover federal agents agreeing to bankroll a cocaine smuggling operation. The FBI set him up with more than 59 pounds (27 kg) of cocaine (worth about US$6.5 million) in a hotel near Los Angeles International Airport after arriving from New York, and the Federal Bureau of Investigation stated DeLorean was the "financier" to help the financially declining company in a scheme to sell 220 lb (100 kg), with an estimated value of US$24 million.
    - dsfyu404ed 8y ago
      The part where the FBI set their sights on John DeLorean at the same time the company was trying to raise money to stay alive. https://en.wikipedia.org/wiki/DeLorean_Motor_Company#Downturn_and_bankruptcy https://en.wikipedia.org/wiki/DeLorean_Motor_Company#Downtur... If Tesla goes down because of this there will be a striking similarity.
zerotolerance 8y ago
The headline is almost as long as the article. Useless article.
romed 8y ago
Good chance that Musk will get placed on the bad actors list and will be unable to serve as an officer or executive of Telsa.
S_A_P 8y ago
Sometimes its possible to care so much that you lose sight of what is important. This happened to Elon. I think this will be a case study someday about CEO ethics. I found it very interesting that when he was on the Joe Rogan podcast he had so much to say about social media, and none of it was complementary. How he did not see the dichotomy of his twitter use and this situation strikes me as humorous. I feel like Elon needs to find some new handlers and get some team members that can keep him from shooting himself in the foot. I only recently got back on twitter. I do not use my likeness or use it for any other reason except to find out about things I consume(stand up comedy, concerts, etc). Twitter is a great platform for that. Its an awful platform for speaking your mind when you run a company(or the country)
- MrEfficiency 8y ago
  Ive said really stupid stuff on Twitter and I lost fans as a result. I cannot explain myself in only a few hundred characters, especially when people dont click links, or only see a small portion of the situation. I did learn my lesson in my 20s.
  - supernovae 8y ago
    twitter wasn't around when we were in our 20s...
    - bdcravens 8y ago
      I can't speak for everyone, but I for one am glad about that
      - supernovae 8y ago
        yes indeed!
- _Codemonkeyism 8y ago
  "I'm using social media the right way, the others are doing it wrong and I wish they'd go away". Always the same line of thinking.
Latteland 8y ago
This time the shorts really have him. Or do they? It turned out Tesla wasn't killed by not being able to make the model 3 at all, it wasn't on being able to make the model s in larger volumes, it wasn't because there was no demand, that there would be no demand after various incentives around the world went down (still some left in the us, also available to all other car companies by the way), it wasn't because they couldn't make the model 3 in volume, it wasn't because they'd all catch on fire and burn up in accidents, it wasn't because the over-promised-over-named autopilot was dangerous and would kill people, it wasn't because the leaf, the volt, the bolt, the i3, the i8, and continually forthcoming cars from audi, porsche, ford, mercedes, bmw killed them. It wasn't because there was a secret sec investigation was preventing them from refinancing, it wasn't because they have just lied all this time about selling the cars for less than manufacturing cost (separate from their enormous money spent on infrastructure), it wasn't because the batteries would run down and not survive heat, cold, regular driving, daily driving, supercharging. It was damn stupid for him to make that twitter comment.
- JoshCole 8y ago
  You may be getting down voted, but you're right that the last several years of fear, uncertainty, and doubt has been shown to have been bullshit in having not panned out. Meanwhile, the last several years of warnings about climate change have been shown to be a true warning. My mother had to evacuate from a fire. A friend has had their city flooded. A different friends home was damaged by a hurricane. I've been begged on the street for a drink during a heat wave.
- chodeboy 8y ago
  people should take their tinfoil hats off. People don't short tesla because they are evil but because they think there a profit to be made. You don't see eco-activist shorting ExxonMobil. Reasons simple: there is no reason to believe that ExxonMobil will go belly-up. Meanwhile, there are a lot of indicators that tesla could fall apart. Just ask yourself: Is the tesla stock massively inflated or are there some anti-tesla illuminites who banded together to sabotage tesla with millions of risk capital just for the lulz?
scotchio 8y ago
Can anyone knowledgable of this kind of stuff comment on the likely outcome of the situation and scenarios (without sensationalizing)? If found guilty, not guilty, penalty (jail, fine, other), investigation time, length, impact on other companies like SpaceX, gravity/frequency of the event vs other companies / offenses, etc.?
- cycrutchfield 8y ago
  The DOJ couldn’t even prosecute any major banks for the fraud that led to the financial collapse in 2008. That is how hard it is to prove criminal intent for white collar crimes. At best, they settle with Musk for some financial penalty.
nostrademons 8y ago
Imagine a private company with ballistic missiles and submarines... I was musing the other day that Elon Musk may be planning to run for president. Why? Well, if there's one thing that 2016 showed us, it's that the road to the White House runs through snubbing Wall Street, calling the press a bunch of boring liars, accusing your opponents of pedophilia, making bizarre incoherent tweet storms in the middle of the night, and bragging about the size of your rocket.
- deleted 8y ago
  [deleted]
- khamoud 8y ago
  It'd be funny but since he was born in South Africa he's disqualified from running.
  - deleted 8y ago
    [deleted]
  - monocasa 8y ago
    Ted Cruz was born in Canada. The naturalization requirement is a lot looser than you might think.
    - bduerst 8y ago
      Ted's parents were US Citizens. Are Musk's?
    - cortesoft 8y ago
      He was born a US citizen though. The requirement isn't that you are born on US soil, but that you are born a US citizen. John McCain was born in Panama.
      - curtis 8y ago
        John McCain's citizenship was more complicated than most people realize. See https://en.wikipedia.org/wiki/Natural-born-citizen_clause#John_McCain https://en.wikipedia.org/wiki/Natural-born-citizen_clause#Jo....
alottafunchata 8y ago
unnessercery
ivraatiems 8y ago
I'm curious - supposing HN had the power to decide, would you replace Elon Musk as CEO of Tesla? What kind of future does the company have without its founder? Personally, I think I would be much more confident in Tesla, and much more likely to buy a Tesla product, if he were not in charge.
- camjohnson26 8y ago
  I would imagine the share price would drop dramatically if he was replaced, which would hurt Tesla's badly needed ability to raise capital over the next few quarters. They desperately need a new CEO but Musk has dug them into such a big hole that it may be too late to find one.
- deleted 8y ago
  [deleted]
- philwelch 8y ago
  I would sell Tesla to a large conglomerate that actually understands car production, like Toyota or VW.
  - ivraatiems 8y ago
    Isn't there a good chance they'd just mothball the whole company and keep on making regular gasoline-engine cars?
    - rootusrootus 8y ago
      Toyota/GM/Ford/VW/etc did not become big, successful corporations by dictating to consumers what they want to buy.
      - ivraatiems 8y ago
        No, but they might be able to remain big, successful corporations by preventing consumers from buying anything else.
village-idiot 8y ago
Tesla would do a lot better if Elon Musk got a social media manager who can veto his dumbest tweets.
bedhead 8y ago
I'm not sure what he could be criminally charged with - neither he nor anyone else at the company sold stock and profited from his idiotic tweets. I believe you actually need to profit from manipulation in order for it to enter the realm of criminal.
- camjohnson26 8y ago
  They caused damage to short sellers when the stock price rose because of Musk's lie and they had to cover their losses, how is that not criminal? You don't have to personally profit to commit a crime.
  - bedhead 8y ago
    To my knowledge, and I'm in the industry, that is not a CRIMINAL act
reggieband 8y ago
I'm starting to get conspiratorially minded about all of this. It began when I couldn't understand the seeming coordination of the attacks against the Uber CEO. I mean, he seemed like the same kind of garden variety psychopath I expect in the role of CEO - why were there so many hit pieces about him specifically? Now Musk is a new target and somehow everyone is cheering for him to fail. Seems like if you get into competition with the auto industry or threaten the oil industry by attempting to change consumer behavior then you become a massive target. I actually feel like forces other than public opinion are at work here.
- rootusrootus 8y ago
  Or, you know, it could be something simple and not a conspiracy at all. If Musk didn't attack every last person who says anything critical about him, even calling one of them a pedo in a public forum, there wouldn't be nearly as much animosity towards him. He has 100% brought this down on himself, he can not blame anyone else. The regular auto industry is likely to crush Tesla within a few years, regardless of how successful they are with the Model 3. They don't need to take shots at the CEO to achieve that, they're going to do it through bringing their own competing products to market and leveraging their own hard-won experience building shitloads of cars.
- keelhaule 8y ago
  especially when the article mentions :p "who were granted anonymity to discuss a confidential criminal probe" press reliability at its finest
  - roywiggins 8y ago
    You think Bloomberg- of all outlets- is manufacturing sources at the Justice Department?
- _audakel 8y ago
  Reminds me of the book "private empire" about ExxonMobil. "Private Empire pulls back the curtain, tracking the corporation’s recent history and its central role on the world stage. The action spans the globe, moving from Moscow, to impoverished African capitals, Indonesia, and elsewhere in heart-stopping scenes that feature kidnapping cases, civil wars, and high-stakes struggles at the Kremlin." Big cooperations could easily find a way to run a "blackops" negative PR campaign, on top of pulling strings in the SEC
overcast 8y ago
The frequency of these bizarre actions by Musk are going up. Is he seriously just cracking under the pressure of having way too much on his plate? The dude is obviously a genius, but he's turning into a mad genius.
- drb91 8y ago
  Why do people keep calling him a genius? His main distinction is his money and DESIRE to build interesting things. Nowhere is his staggering, extraordinary intelligence evident. I’d love to be demonstrated wrong, but this genius fetishism seems to be harmful with no benefit: the man is running a company. Judge him on how well he does, not how he’s so intelligent it's so sad he can't take care of his employees responsibly.
- diminoten 8y ago
  Random events tend to appear clustered.
Asparagirl 8y ago
The thing is, now that the DOJ has their foot in the door, they may not stop at the infamous tweet. They're going to look at the books. They're going to be talking to allllll the recent senior executive departures, some of whom ran for the hills within days of taking their jobs. Who knows what kinds of bugs they'll find when they turn over some rocks?
aeriklawson 8y ago
A public lesson for future CEOs to just stay the fuck off social media - Elon swam far up shit creek purely because of his engagement with Twitter. It's not worth the trouble.
- SilasX 8y ago
  I wouldn't be surprised if the Board had (at the least) considered restricting his social media so that his messages require approval from someone else.
chodeboy 8y ago
Has anyone ever made a psychoanalysis of the average musk/jobs/zuckerberg "fanatic". I feel like people have some sort of messiah complex. Where companies become religions each with their own set of rituals, like waiting for 10 weeks in the street and inquisitions denouncing critics as hereticals ("shorts", "android-shills", etc.) Finding out whether people try to replace their philosophical hole left by a lack of believe or being dissatisfied with materialistic world-views is the cause of this "technoreligions" in the 21st century could make for a nice dissertation.
Animats 8y ago
Next the California Highway Patrol will be after him for texting while driving. Tesla might be better off without Musk. It's past the stage where it needs a visionary. Now it needs someone who can run a big auto manufacturer.
rboyd 8y ago
first interplanetary flight risk?
jv22222 8y ago
I'm curious, if you are a long, did you upvote this HN submission? It would be interesting to see how sentiment like that shaped the ebb and flow of Hacker News.
thiagotomei 8y ago
Me
manicdee 8y ago
Note: no criminal probe. This is hyperbole. Note: Martha Stewart did worse and was only found guilty on the coverup and fraud after the fact. Note: hit piece by Bloomberg, clearly attempting to manipulate stock price as they have done for years without any prosecution.
lorenzorhoades 8y ago
Suprising to see here that the majority seem to be anti-Musk. "He's guilty, send him to jail" without allowing evidence to come forward that these statements were false. >"the matter should be quickly resolved as they review the information they have received." If anything the public statement says the opposite. I actually believe there may have been some email, or conversations about a buyout of Tesla. Wouldn't be the first time, Google almost bought Tesla in 2008 during the financial crisis.

339 points by whatok 8y ago

minimaxir 8y ago

Notably, this now involves the DOJ, not just the SEC.

tomatocracy 8y ago
That's likely because the SEC does not have the power to undertake criminal prosecutions.

HelloFellowDevs 8y ago

I'm assuming non libel related statements and company related statements only.

harryh 8y ago

There are a lot of things to respect about Musk. But he lied on twitter in a direct effort to cause financial harm to people shorting Tesla stock. You can't do that. He should go to jail.

beaconstudios 8y ago
> But he lied on twitter in a direct effort to cause financial harm to people shorting Tesla stock. Do you have evidence of this, or is it speculation?
- tomc1985 8y ago
  If you read his rants/tweets around this time it is pretty clear he is has it in for short sellers
  - 32847yjo87tj 8y ago
    That much is not illegal.
    - Asparagirl 8y ago
      But it provides motive.
- harryh 8y ago
  The "lied on twitter" part is now clear. He said he had funding secured for a buyout at $420 which he has now basically admitted was not true. The "cause financial harm to people shorting Tesla stock" is a bit of speculation but it seems basically obvious to all observers.
  - beaconstudios 8y ago
    > but it seems basically obvious to all observers. It doesn't seem obvious to me. It seems like one of a few interpretations, not limited to: - Elon was overly stressed (as has been documented recently) and didn't think before posting such an impactful statement - He considers twitter to be an official outlet for Tesla and just continued with his tendency to publicise his decisions and thought process constantly. - His idea of "secured" is simply different from the SEC definition and if the funding had been SEC-secured, the tweet would be a compliant form of public disclosure. [edit] To be clear, I'm not arguing that the tweet shouldn't be investigated. I'm saying that "he intentionally lied to screw over short sellers" is presumptive and that may not have been his intent.
    - chooseaname 8y ago
      So, anyone can get away with a crime if they're overstressed? or just Elon? > His idea of "secured" is simply different from the SEC definition ... He is the CEO. He's not allowed to have a different definition. Words mean things. That's how we communicate.
      - beaconstudios 8y ago
        > So, anyone can get away with a crime if they're overstressed? Are you putting words in my mouth on purpose? I'm not arguing that he shouldn't be investigated. I'm arguing that "trying to screw over short sellers" is not the only and "obvious" reason why he could have made the tweet.
        emodendroket 8y ago
- rigsby50 8y ago
  Are you saying he bought Twitter at $420 and the funding was secured for it? Because that sounded like an outright lie. He also doubled down by making that blog post thereby voicing this in his capacity as Tesla CEO. It wouldn't be illegal if there was a tender offer for the shares at $420.
atonse 8y ago
As sad as this makes me (because I want Tesla to be wildly successful), I have to agree. This is textbook and brazen stock manipulation, a flat out crime.
- crankylinuxuser 8y ago
  Isn't "Opening a civil and criminal investigation" without due process, also direct manipulation as well? Surely, prior to a fault/guilty verdict, running someone through the mud is furtherance of that, no? This reminds me of "perp watches" posed by police departments on Facebook and twitter. No charges, but arrested - and you get to live in the newspaper and social media regardless if you are exonerated. Cause, public shaming? edit: s/peep/perp/
  - jchw 8y ago
    A criminal investigation being opened is literally part of due process.
    - pathseeker 8y ago
      The big announcement is what OP is referring to.
      - aaomidi 8y ago
        The big announcement is part of transparency and keeping the US government accountable. There is simply no other way, the only reason this is a big announcement is because Elon is very active on social media.
      - _jal 8y ago
        Allow me a moment to note the irony of complaining about big announcements in this context.
      - jchw 8y ago
        I must've missed something, what I understood from reading the article was simply that there are insider reports of a criminal probe, not that the U.S. government made an announcement of such.
ConfusedDog 8y ago
Why is it a lie? Saudi did not invest Lucid when he posted the twit. You don't know that funding was not secured. As a matter of fact, if the board supported the decision, it would have been Tesla being invested. The statement itself is not necessarily a lie (could be) but it seems to me likely not.
- whatok 8y ago
  Did you read the statement he put out? He basically said everything was a lie.
  - ConfusedDog 8y ago
    He you mean Elon Musk? He admitted the funding was not secured at the time and was never intended to buy back stock at $420? Why not post a link and let us see.
    - gamblor956 8y ago
      He actually did admit that funding was not secured to buy the stock back for $420. https://www.tesla.com/blog/update-taking-tesla-private https://www.tesla.com/blog/update-taking-tesla-private In the post, he also admits that the Saudi Arabian investment would only provide a small fraction of the necessary amount needed to go private.
      - dragontamer 8y ago
        That's DAYS after Musk made the initial "Funding Secured" tweet. https://twitter.com/elonmusk/status/1026872652290379776?lang=en https://twitter.com/elonmusk/status/1026872652290379776?lang... Follow the original twitter feed yourself. Its not like its been deleted. Musk is very clear that "funding is secured", and in follow up tweets. > Am considering taking Tesla private at $420. Funding secured. > Shareholders could either to sell at 420 or hold shares & go private > My hope is all current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment. ---------- Days later, Musk posts a blogpost that directly contradicts his original tweets. IE: He was lying originally. We now know that there's no buyer who was willing to spend $70 Billion to buyout Tesla and take it private. The question then, is was this lie "negligence" (SEC fine), or was it intended to manipulate the price? (FBI jailtime). The DoJ case implies the FBI is looking into the jailtime question. While the SEC is looking into the negligence question. Both cases will move forward as appropriate. My bet is that SEC gets him on negligence, but I don't really know enough about history / other cases to know what kind of punishment Musk will get. I'm guessing a fine of some kind, but the SEC does have the power to remove Musk from his CEO position entirely.
32847yjo87tj 8y ago
Except he didn't lie. Funding was secured. So much so that when shareholders objected and Musk retracted, the Saudi wealth fund went out and invested substantially in a Telsa competitor. This is all drama for drama's sake.
- camjohnson26 8y ago
  A $1 billion investment isn't even close to what it would have cost to take Tesla private at $420.
- rootusrootus 8y ago
  Guess we'll find out. He'll have documentation for the feds, and then they will not charge him with a crime.
abalone 8y ago
This is a massive oversimplification. Musk may be in peril but this is not as cut-and-dried a case of fraud like you make it seem. Consider this recent comment from the SEC: “When you talk about fraud,” [Jina Choi of the SEC] answered, “you’re talking about a state of mind, you’re talking about mens rea. We call it scienter. You have to do something with intentionality. The idea of just making a misstatement doesn’t necessarily rise to the level of fraud." Misstatements can “be the first step to fraud,” Choi had added. “But generally, when we talk about fraud the F word, I think we are talking about a state of mind that’s a little bit higher than that.”[1] That telegraphs a pretty lenient stance on misstatements that aren't completely fabricated. And there were actual serious negotiations happening here. That's not in dispute. Without question, Musk made a misstatement. But what was his state of mind? Was there intent to deceive, or was he merely overzealous in his interpretation of the negotiations? If he can argue the latter then it may not rise to the level of criminal fraud. [1] https://techcrunch.com/2018/09/13/a-tesla-investor-says-he-was-recently-questioned-by-u-s-regulators-about-that-infamous-funding-secured-tweet/ https://techcrunch.com/2018/09/13/a-tesla-investor-says-he-w...
- JumpCrisscross 8y ago
  > That telegraphs a pretty lenient stance on misstatements that aren't completely fabricated American commercial law goes out of its way to avoid criminalizing stupidity. At a certain level, the difference between a genius and a madman is the genius was correct. They are indifferentiable without the benefit of hindsight. The nail in Elon's coffin (or lack thereof) will probably revolve around the degree to which he documented his animus towards short sellers in the days leading up to the misstatement.
  - abalone 8y ago
    Nah, it's clear Musk hates short sellers. That's not the issue. Nor is his desire to hurt them. The question is whether he had scienter when misstating the finality of the deal he was negotiating.
    - JumpCrisscross 8y ago
na85 8y ago
This. I'm sick of people giving high-profile people in the tech sector a pass on their shitty behaviour because of the pervasive hero-worship culture. Jobs, Zuck, Torvalds, etc. Irrespective of Musk "caring too much" or whatever other justification his fans have concocted, this is exactly the sort of behaviour (lying to manipulate the market) we have laws to prohibit. We see articles every so often about how Tech as an industry needs to play catch up on the Ethics side of things. Now's the chance.

chollida1 8y ago

The sad piece of karma in all of this is that Musk tweeted in an effort to destroy the shorts. His tweet turned out to: - give the shorts a big dip in his stock, - an investigation by the SEC - an investigation by the DOJ - the backing off of a deep pocketed investor in the Saudis - Him potentially being personally liable, which would mean having to step away from SpaceX and Tesla if he was found guilty of fraud. This could be the biggest thing to come out of all of this. Imagine Elon getting a 2 year ban on begin an executive in a company. Or SpaceX not being able to bid on government contracts because their CEO is a felon. There is going to be a lot of backroom dealing to do everything they can to prevent Elon from being charged. - A lawsuit that is seeking class action status for anyone who was short at the time of his tweet. - this is speculation, but it must have really strained his relationship with the board. I mean you can only fight so many battles at once, you'd think you'd want to have the board on your side All to screw with the shorts, who really have no power what-so ever to hinder Telsa. If he had just not used twitter he and Tesla would be better off and the shorts would be worse off.

TAForObvReasons 8y ago
> All to screw with the shorts, who really have no power whatso ever to hinder Telsa. If Tesla wasn't burning through cash and didn't need an ever-inflating stock price in order to keep the house in order, the shorts would be powerless and in all honestly would back off. The only reason the shorts have power is that Tesla's future is currently heavily dependent on its stock price.
- beaner 8y ago
  Can you explain how that works? I thought that once a company's stock was listed, third parties just trade it amongst themselves. How does that activity affect Tesla in terms of how they're able to execute?
  - romed 8y ago
    Public companies can raise money through "secondary" offerings of stock. That's why an IPO is called an "initial" offering.

mrindividual 8y ago

Why? Does Jeff Sessions not like the weed reference?

someonelse17 8y ago

Why? does Jeff Session not like the weed reference? There is no call for a criminal probe her.

scotchio 8y ago

Another day, another excited slam piece headline against Tesla. Tesla's Nov 7 Earning Report must be good... In all seriousness, no idea what Elon was thinking with that Tweet. Gut says, long term Tesla will be fine and little will to come of this investigation.

dsfyu404ed 8y ago
>Gut says, long term Tesla will be fine and little will to come of this investigation. Or this could be their DeLorean moment. People's guts are notoriously bad at predicting the future.
- PakG1 8y ago
  Out of curiosity, what was the DeLorean moment? I know DeLorean didn't succeed in the long term. But what was this "moment" you're talking about? Google gave me nothing.
  - hfdgiutdryg 8y ago
    Probably DeLorean's attempt to traffic cocaine in order to keep the company afloat: > On October 19, 1982, DeLorean was charged by the U.S. government with trafficking cocaine following a videotaped sting operation in which he was recorded by undercover federal agents agreeing to bankroll a cocaine smuggling operation. The FBI set him up with more than 59 pounds (27 kg) of cocaine (worth about US$6.5 million) in a hotel near Los Angeles International Airport after arriving from New York, and the Federal Bureau of Investigation stated DeLorean was the "financier" to help the financially declining company in a scheme to sell 220 lb (100 kg), with an estimated value of US$24 million.
  - dsfyu404ed 8y ago
    The part where the FBI set their sights on John DeLorean at the same time the company was trying to raise money to stay alive. https://en.wikipedia.org/wiki/DeLorean_Motor_Company#Downturn_and_bankruptcy https://en.wikipedia.org/wiki/DeLorean_Motor_Company#Downtur... If Tesla goes down because of this there will be a striking similarity.

zerotolerance 8y ago

The headline is almost as long as the article. Useless article.

romed 8y ago

Good chance that Musk will get placed on the bad actors list and will be unable to serve as an officer or executive of Telsa.

S_A_P 8y ago

Sometimes its possible to care so much that you lose sight of what is important. This happened to Elon. I think this will be a case study someday about CEO ethics. I found it very interesting that when he was on the Joe Rogan podcast he had so much to say about social media, and none of it was complementary. How he did not see the dichotomy of his twitter use and this situation strikes me as humorous. I feel like Elon needs to find some new handlers and get some team members that can keep him from shooting himself in the foot. I only recently got back on twitter. I do not use my likeness or use it for any other reason except to find out about things I consume(stand up comedy, concerts, etc). Twitter is a great platform for that. Its an awful platform for speaking your mind when you run a company(or the country)

MrEfficiency 8y ago
Ive said really stupid stuff on Twitter and I lost fans as a result. I cannot explain myself in only a few hundred characters, especially when people dont click links, or only see a small portion of the situation. I did learn my lesson in my 20s.
- supernovae 8y ago
  twitter wasn't around when we were in our 20s...
  - bdcravens 8y ago
    I can't speak for everyone, but I for one am glad about that
    - supernovae 8y ago
      yes indeed!
_Codemonkeyism 8y ago
"I'm using social media the right way, the others are doing it wrong and I wish they'd go away". Always the same line of thinking.

Latteland 8y ago

This time the shorts really have him. Or do they? It turned out Tesla wasn't killed by not being able to make the model 3 at all, it wasn't on being able to make the model s in larger volumes, it wasn't because there was no demand, that there would be no demand after various incentives around the world went down (still some left in the us, also available to all other car companies by the way), it wasn't because they couldn't make the model 3 in volume, it wasn't because they'd all catch on fire and burn up in accidents, it wasn't because the over-promised-over-named autopilot was dangerous and would kill people, it wasn't because the leaf, the volt, the bolt, the i3, the i8, and continually forthcoming cars from audi, porsche, ford, mercedes, bmw killed them. It wasn't because there was a secret sec investigation was preventing them from refinancing, it wasn't because they have just lied all this time about selling the cars for less than manufacturing cost (separate from their enormous money spent on infrastructure), it wasn't because the batteries would run down and not survive heat, cold, regular driving, daily driving, supercharging. It was damn stupid for him to make that twitter comment.

JoshCole 8y ago
You may be getting down voted, but you're right that the last several years of fear, uncertainty, and doubt has been shown to have been bullshit in having not panned out. Meanwhile, the last several years of warnings about climate change have been shown to be a true warning. My mother had to evacuate from a fire. A friend has had their city flooded. A different friends home was damaged by a hurricane. I've been begged on the street for a drink during a heat wave.
chodeboy 8y ago
people should take their tinfoil hats off. People don't short tesla because they are evil but because they think there a profit to be made. You don't see eco-activist shorting ExxonMobil. Reasons simple: there is no reason to believe that ExxonMobil will go belly-up. Meanwhile, there are a lot of indicators that tesla could fall apart. Just ask yourself: Is the tesla stock massively inflated or are there some anti-tesla illuminites who banded together to sabotage tesla with millions of risk capital just for the lulz?

scotchio 8y ago

Can anyone knowledgable of this kind of stuff comment on the likely outcome of the situation and scenarios (without sensationalizing)? If found guilty, not guilty, penalty (jail, fine, other), investigation time, length, impact on other companies like SpaceX, gravity/frequency of the event vs other companies / offenses, etc.?

cycrutchfield 8y ago
The DOJ couldn’t even prosecute any major banks for the fraud that led to the financial collapse in 2008. That is how hard it is to prove criminal intent for white collar crimes. At best, they settle with Musk for some financial penalty.

nostrademons 8y ago

Imagine a private company with ballistic missiles and submarines... I was musing the other day that Elon Musk may be planning to run for president. Why? Well, if there's one thing that 2016 showed us, it's that the road to the White House runs through snubbing Wall Street, calling the press a bunch of boring liars, accusing your opponents of pedophilia, making bizarre incoherent tweet storms in the middle of the night, and bragging about the size of your rocket.

deleted 8y ago
[deleted]
khamoud 8y ago
It'd be funny but since he was born in South Africa he's disqualified from running.
- deleted 8y ago
  [deleted]
- monocasa 8y ago
  Ted Cruz was born in Canada. The naturalization requirement is a lot looser than you might think.
  - bduerst 8y ago
    Ted's parents were US Citizens. Are Musk's?
  - cortesoft 8y ago
    He was born a US citizen though. The requirement isn't that you are born on US soil, but that you are born a US citizen. John McCain was born in Panama.
    - curtis 8y ago
      John McCain's citizenship was more complicated than most people realize. See https://en.wikipedia.org/wiki/Natural-born-citizen_clause#John_McCain https://en.wikipedia.org/wiki/Natural-born-citizen_clause#Jo....

alottafunchata 8y ago

unnessercery

ivraatiems 8y ago

I'm curious - supposing HN had the power to decide, would you replace Elon Musk as CEO of Tesla? What kind of future does the company have without its founder? Personally, I think I would be much more confident in Tesla, and much more likely to buy a Tesla product, if he were not in charge.

camjohnson26 8y ago
I would imagine the share price would drop dramatically if he was replaced, which would hurt Tesla's badly needed ability to raise capital over the next few quarters. They desperately need a new CEO but Musk has dug them into such a big hole that it may be too late to find one.
deleted 8y ago
[deleted]
philwelch 8y ago
I would sell Tesla to a large conglomerate that actually understands car production, like Toyota or VW.
- ivraatiems 8y ago
  Isn't there a good chance they'd just mothball the whole company and keep on making regular gasoline-engine cars?
  - rootusrootus 8y ago
    Toyota/GM/Ford/VW/etc did not become big, successful corporations by dictating to consumers what they want to buy.
    - ivraatiems 8y ago
      No, but they might be able to remain big, successful corporations by preventing consumers from buying anything else.

village-idiot 8y ago

Tesla would do a lot better if Elon Musk got a social media manager who can veto his dumbest tweets.

bedhead 8y ago

I'm not sure what he could be criminally charged with - neither he nor anyone else at the company sold stock and profited from his idiotic tweets. I believe you actually need to profit from manipulation in order for it to enter the realm of criminal.

camjohnson26 8y ago
They caused damage to short sellers when the stock price rose because of Musk's lie and they had to cover their losses, how is that not criminal? You don't have to personally profit to commit a crime.
- bedhead 8y ago
  To my knowledge, and I'm in the industry, that is not a CRIMINAL act

reggieband 8y ago

I'm starting to get conspiratorially minded about all of this. It began when I couldn't understand the seeming coordination of the attacks against the Uber CEO. I mean, he seemed like the same kind of garden variety psychopath I expect in the role of CEO - why were there so many hit pieces about him specifically? Now Musk is a new target and somehow everyone is cheering for him to fail. Seems like if you get into competition with the auto industry or threaten the oil industry by attempting to change consumer behavior then you become a massive target. I actually feel like forces other than public opinion are at work here.

rootusrootus 8y ago
Or, you know, it could be something simple and not a conspiracy at all. If Musk didn't attack every last person who says anything critical about him, even calling one of them a pedo in a public forum, there wouldn't be nearly as much animosity towards him. He has 100% brought this down on himself, he can not blame anyone else. The regular auto industry is likely to crush Tesla within a few years, regardless of how successful they are with the Model 3. They don't need to take shots at the CEO to achieve that, they're going to do it through bringing their own competing products to market and leveraging their own hard-won experience building shitloads of cars.
keelhaule 8y ago
especially when the article mentions :p "who were granted anonymity to discuss a confidential criminal probe" press reliability at its finest
- roywiggins 8y ago
  You think Bloomberg- of all outlets- is manufacturing sources at the Justice Department?
_audakel 8y ago
Reminds me of the book "private empire" about ExxonMobil. "Private Empire pulls back the curtain, tracking the corporation’s recent history and its central role on the world stage. The action spans the globe, moving from Moscow, to impoverished African capitals, Indonesia, and elsewhere in heart-stopping scenes that feature kidnapping cases, civil wars, and high-stakes struggles at the Kremlin." Big cooperations could easily find a way to run a "blackops" negative PR campaign, on top of pulling strings in the SEC

overcast 8y ago

The frequency of these bizarre actions by Musk are going up. Is he seriously just cracking under the pressure of having way too much on his plate? The dude is obviously a genius, but he's turning into a mad genius.

drb91 8y ago
Why do people keep calling him a genius? His main distinction is his money and DESIRE to build interesting things. Nowhere is his staggering, extraordinary intelligence evident. I’d love to be demonstrated wrong, but this genius fetishism seems to be harmful with no benefit: the man is running a company. Judge him on how well he does, not how he’s so intelligent it's so sad he can't take care of his employees responsibly.
diminoten 8y ago
Random events tend to appear clustered.

Asparagirl 8y ago

The thing is, now that the DOJ has their foot in the door, they may not stop at the infamous tweet. They're going to look at the books. They're going to be talking to allllll the recent senior executive departures, some of whom ran for the hills within days of taking their jobs. Who knows what kinds of bugs they'll find when they turn over some rocks?

aeriklawson 8y ago

A public lesson for future CEOs to just stay the fuck off social media - Elon swam far up shit creek purely because of his engagement with Twitter. It's not worth the trouble.

SilasX 8y ago
I wouldn't be surprised if the Board had (at the least) considered restricting his social media so that his messages require approval from someone else.

chodeboy 8y ago

Has anyone ever made a psychoanalysis of the average musk/jobs/zuckerberg "fanatic". I feel like people have some sort of messiah complex. Where companies become religions each with their own set of rituals, like waiting for 10 weeks in the street and inquisitions denouncing critics as hereticals ("shorts", "android-shills", etc.) Finding out whether people try to replace their philosophical hole left by a lack of believe or being dissatisfied with materialistic world-views is the cause of this "technoreligions" in the 21st century could make for a nice dissertation.

Animats 8y ago

Next the California Highway Patrol will be after him for texting while driving. Tesla might be better off without Musk. It's past the stage where it needs a visionary. Now it needs someone who can run a big auto manufacturer.

rboyd 8y ago

first interplanetary flight risk?

jv22222 8y ago

I'm curious, if you are a long, did you upvote this HN submission? It would be interesting to see how sentiment like that shaped the ebb and flow of Hacker News.

thiagotomei 8y ago

manicdee 8y ago

Note: no criminal probe. This is hyperbole. Note: Martha Stewart did worse and was only found guilty on the coverup and fraud after the fact. Note: hit piece by Bloomberg, clearly attempting to manipulate stock price as they have done for years without any prosecution.

lorenzorhoades 8y ago

Suprising to see here that the majority seem to be anti-Musk. "He's guilty, send him to jail" without allowing evidence to come forward that these statements were false. >"the matter should be quickly resolved as they review the information they have received." If anything the public statement says the opposite. I actually believe there may have been some email, or conversations about a buyout of Tesla. Wouldn't be the first time, Google almost bought Tesla in 2008 during the financial crisis.