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Can you explain why he is not allowed to? I don’t understand the justification behind the regulations / laws here

by Dumblydorr 8y ago

empath75 8y ago
You can't lie to investors, that's securities fraud. He's lucky he wasn't facing criminal charges.
- rcMgD2BwE72F 8y ago
  What was the lie exactly? "Funding secured" after the Saudi repeated multiple times that they would pay cash for the operation – which was refused repeatedly in the past by Elon himself? Since most shareholders wanted to remain, the cost of the operation was estimated to be below $20B so who doubt that the funding wasn't secured?
  - sah2ed 8y ago
    Matt Levine's Money Stuff [0] is a great read on problem with Musk's "funding secured" tweet. [0] https://www.bloomberg.com/view/articles/2018-08-13/funding-for-elon-musk-s-tesla-buyout-wasn-t-so-secure https://www.bloomberg.com/view/articles/2018-08-13/funding-f...
wonderwonder 8y ago
Greatly simplifying here. Essentially because what the CEO of a publicly traded company says can have real world consequences for the man on the street. If Elon tweeted that they were about to sell triple the number of cars analysts predicted, everyone would run to buy Tesla stock thinking its a can't lose. Each of those people buying the stock causes the stock price to go up (generalizing here), so the next person to buy purchases at a higher price. But hey they are trippling expectations, this stock is going to the moon. Hedge funds, pensions and retirement accounts also get into the action. Now if it turns out that Elon was just pulling a joke and a few days later he tweeted, just kidding guys. The stock would tank. Everyone that had purchased at the higher and higher price would take a massive loss, including all of those retirement accounts. That's why executives of publicly traded companies cant lie because people make financial decisions based on those lies. Some of those buyers control billions in retirement funds (maybe even your 401k). If Tesla happened to be in the process of negotiating a loan or bond at the same time, it's massively fraudulent if they get better rates off the lies that were tweeted out. In addition, anybody shorting the stock faced a real risk of being liquidated due to the stock sky rocketing due to a lie. I am a huge fan of Musk, and think he is doing incredible things but he really should not have done that.

Can you explain why he is not allowed to? I don’t understand the justification behind the regulations / laws here

empath75 8y ago

You can't lie to investors, that's securities fraud. He's lucky he wasn't facing criminal charges.

rcMgD2BwE72F 8y ago
What was the lie exactly? "Funding secured" after the Saudi repeated multiple times that they would pay cash for the operation – which was refused repeatedly in the past by Elon himself? Since most shareholders wanted to remain, the cost of the operation was estimated to be below $20B so who doubt that the funding wasn't secured?
- sah2ed 8y ago
  Matt Levine's Money Stuff [0] is a great read on problem with Musk's "funding secured" tweet. [0] https://www.bloomberg.com/view/articles/2018-08-13/funding-for-elon-musk-s-tesla-buyout-wasn-t-so-secure https://www.bloomberg.com/view/articles/2018-08-13/funding-f...

wonderwonder 8y ago

Greatly simplifying here. Essentially because what the CEO of a publicly traded company says can have real world consequences for the man on the street. If Elon tweeted that they were about to sell triple the number of cars analysts predicted, everyone would run to buy Tesla stock thinking its a can't lose. Each of those people buying the stock causes the stock price to go up (generalizing here), so the next person to buy purchases at a higher price. But hey they are trippling expectations, this stock is going to the moon. Hedge funds, pensions and retirement accounts also get into the action. Now if it turns out that Elon was just pulling a joke and a few days later he tweeted, just kidding guys. The stock would tank. Everyone that had purchased at the higher and higher price would take a massive loss, including all of those retirement accounts. That's why executives of publicly traded companies cant lie because people make financial decisions based on those lies. Some of those buyers control billions in retirement funds (maybe even your 401k). If Tesla happened to be in the process of negotiating a loan or bond at the same time, it's massively fraudulent if they get better rates off the lies that were tweeted out. In addition, anybody shorting the stock faced a real risk of being liquidated due to the stock sky rocketing due to a lie. I am a huge fan of Musk, and think he is doing incredible things but he really should not have done that.