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In the US, you're not supposed to say anything publicly that can manipulate the stock price. For a person in Elon Musk's position, it is incredibly easy to drum

In the US, you're not supposed to say anything publicly that can manipulate the stock price. For a person in Elon Musk's position, it is incredibly easy to drum up hype about a stock from a public media source (in this case, Twitter) then secretly sell off stock at the higher price causing it to dip further than it was at before. This is called pump and dumping and is very illegal in the United States (read up on The Great Depression and the stock crash of 1929 for more information).

anonytrary 8y ago
> In the US, you're not supposed to say anything publicly that can manipulate the stock price Not quite. You can't intentionally say things for the purpose of manipulating the price, you can still say things if they affect the price -- it is impossible not to, since every little thing a CEO does affects the price to some extent (econophysics?). The lawsuit would have to prove that Musk tweeted with the intention of manipulating the price. Seeing as Musk has always been wary of being public, it seems unlikely he engineered the tweet to do this. Occam's Razor would suggest that he's getting sick and tired of being public (ironically, for this exact reason) and tweeted that he would rather just take it private to avoid this sort of drama.
- chibg10 8y ago
  Of course a CEO "manipulates" the stock with every other word. But the words, especially ones expected to greatly affect the stock price, have to be accurate. Investors would lose confidence in the market (and thus not invest, hurting the economy) if CEOs can do things like troll about buyouts. The SEC exists to protect against these shenanigans and is right to take action if Musk trolling is indeed the case.
- brisance 8y ago
  Did you forget that this is only the SEC action and that the DOJ is also investigating? The DOJ has subpoena power… they can easily build a case by gathering witnesses, starting with the board of directors.
- village-idiot 8y ago
  That’s not the bar for this case, since it’s civil. Proving negligence is enough, and the burden of proof is “preponderance of evidence”, not “presumption of innocence.”
- PSZD 8y ago
  Musk didn't say he wanted to take the company private, he said he wanted to AND that he had secured funding to do so at a specific price. This is a clear statement of facts, something that would be entirely reasonable to trade based on. It also appears he knew this was a false statement, at best it was very reckless. I really don't see how you can defend this. When your words make people gain or lose 9 or 10 digits of money in a matter of hours, they are taken very seriously.
  - tim333 8y ago
    And it seems likely that he did have the "intention of manipulating the price." He's gone on about price changes and annoying the short sellers quite a bit. He's not naive on this stuff.
- mbesto 8y ago
  > The lawsuit would have to prove that Musk tweeted with the intention of manipulating the price. Uhhh you mean like the endless rants about trying to get rid of short sellers? That isn't enough to establish a motive for you?

anonytrary 8y ago

> In the US, you're not supposed to say anything publicly that can manipulate the stock price Not quite. You can't intentionally say things for the purpose of manipulating the price, you can still say things if they affect the price -- it is impossible not to, since every little thing a CEO does affects the price to some extent (econophysics?). The lawsuit would have to prove that Musk tweeted with the intention of manipulating the price. Seeing as Musk has always been wary of being public, it seems unlikely he engineered the tweet to do this. Occam's Razor would suggest that he's getting sick and tired of being public (ironically, for this exact reason) and tweeted that he would rather just take it private to avoid this sort of drama.

chibg10 8y ago
Of course a CEO "manipulates" the stock with every other word. But the words, especially ones expected to greatly affect the stock price, have to be accurate. Investors would lose confidence in the market (and thus not invest, hurting the economy) if CEOs can do things like troll about buyouts. The SEC exists to protect against these shenanigans and is right to take action if Musk trolling is indeed the case.
brisance 8y ago
Did you forget that this is only the SEC action and that the DOJ is also investigating? The DOJ has subpoena power… they can easily build a case by gathering witnesses, starting with the board of directors.
village-idiot 8y ago
That’s not the bar for this case, since it’s civil. Proving negligence is enough, and the burden of proof is “preponderance of evidence”, not “presumption of innocence.”
PSZD 8y ago
Musk didn't say he wanted to take the company private, he said he wanted to AND that he had secured funding to do so at a specific price. This is a clear statement of facts, something that would be entirely reasonable to trade based on. It also appears he knew this was a false statement, at best it was very reckless. I really don't see how you can defend this. When your words make people gain or lose 9 or 10 digits of money in a matter of hours, they are taken very seriously.
- tim333 8y ago
  And it seems likely that he did have the "intention of manipulating the price." He's gone on about price changes and annoying the short sellers quite a bit. He's not naive on this stuff.
mbesto 8y ago
> The lawsuit would have to prove that Musk tweeted with the intention of manipulating the price. Uhhh you mean like the endless rants about trying to get rid of short sellers? That isn't enough to establish a motive for you?