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SEC Asks Manhattan Federal Court to Hold Elon Musk in Contempt
- DSingularity 8y agoOffending Tweet: https://twitter.com/elonmusk/status/1098009983931707393 https://twitter.com/elonmusk/status/1098009983931707393
- darkpuma 8y agoWas that particular tweet the offender, or the two subsequent tweets? > "Tesla made 0 cars in 2011, but will make around 500k in 2019" > "Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k." The article seems to suggest it was tweets about projected numbers. Edit: From the filing: > "On February 19, 2019, Musk tweeted, “Tesla made 0 cars in 2011, but will make around 500k in 2019.” Musk did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people. Musk has thus violated the Court’s Final Judgment by engaging in the very conduct that the pre-approval provision of the Final Judgment was designed to prevent. "
- a-wu 8y agoAccording to the filing posted by another user, the first one.
- bostonpete 8y agoThat's incorrect if you read the SEC filling the problem was that he was projecting 2019 production publicly
- a-wu 8y agoRight, he was projecting 2019 production publicly, and the SEC cites the first tweet as the projection that violated the original agreement.
- mlindner 8y agoExcept that was already public information.
- jaimex2 8y agoCorrect. It was in the outlook of the last quarterly: http://ir.tesla.com/static-files/0b913415-467d-4c0d-be4c-9225c2cb0ae0 http://ir.tesla.com/static-files/0b913415-467d-4c0d-be4c-922...
- ikeboy 8y agoThat says 500k annualized, not 500k for the year
- Dylan16807 8y agoAnd 500k annualized is what he claims the meaning of the tweet to be. Unless Tesla updates their projections soon, that's probably not a lie.
- ikeboy 8y agoNobody's claiming the annualized number is a lie. The claim is the original post is wrongly saying 500k total for the year and wasn't run past someone else like Musk promised he would for all Tesla related statements.
- Dylan16807 8y ago> Nobody's claiming the annualized number is a lie. I was talking about whether "Musk meant the annualized number." is true or a lie. > The claim is the original post is wrongly saying 500k total for the year and wasn't run past someone else like Musk promised he would for all Tesla related statements. The agreement was that he would get approval for posts with material information. If he's citing a number everyone already knows from the public report, then it's not material information. (except in some kind of unreasonably-broad sense that would make "Tesla makes cars." an offending tweet) So if he says 500k, and he's talking about the annualized number in the previous public report, then there is a strong argument that he doesn't need approval. If he says 500k and it's not annualized, then it's a new number, and he does need approval.
- xenadu02 8y ago> the problem was that he was projecting 2019 production publicly That is also incorrect. The settlement only mandated that Musk get company approval for Tesla-related tweets. It would have been as simple as him sending an email with the proposed tweet to get signoff before blasting it out there. This is actually extremely common and partially for these sorts of reasons. The SEC asked Tesla if Musk followed the agreement by getting approval for the tweet. He didn't, thus this filing.
- CydeWeys 8y agoI'm just a random nobody and I have to get way more approval posting anything work-related than Elon Musk, apparently.
- bostonpete 8y agoThe settlement required approval for statement containing information material to shareholders, not any tweet about Tesla. That's why the 2019 projection was mention as the problematic tweet in the SEC filing
- Derek_MK 8y ago> The SEC asked Tesla if Musk followed the agreement by getting approval for the tweet. He didn't, thus this filing. This is the unbelievable part. "We agree to NOT do X, under penalty of law." [Does X] "Did you do X?" "yeah lol"
- darkpuma 8y agoElon is the guy who fucked up, not Telsa. Whoever the FEC asked that question to at Tesla was probably not Elon himself, and the person on the receiving end of that question probably didn't want to lie to a fed.
- Derek_MK 8y agoYeah, I guess I understand why they confirmed it, it's just wild that this is happening right now.
- travisoneill1 8y agoSo all he has to do is find a fall guy to say he approved it, and it will be thrown out?
- avar 8y agoYes. Getting out of contempt of court is so easy! Just add a little perjury on top. Who's keeping track anyway?
- Rebelgecko 8y agoTesla's legal already said they didn't approve the first tweet, but they worked with him on the correction that was posted 4 hours later. Wonder if that's why their general counsel quit again...
- spectramax 8y agoAt this point, the board of directors should just demand deletion of his Twitter account. I admire Elon for his vision, and actually also admire his radical style despite of its unpopular image - I watched the video where he smoked pot on the radio show. It was a really amazing conversation about future of humanity. He just needs to stop tweeting. You may say it’s fixing the symptom, but here if we take Twitter away, he would stop yelling stupid FCC punishable things. As a side note, Twitter has hardly done anything useful for the society. I never got into twitter and never understood its value. Conversations are one sided, blog posts are separated into incomprehensible chain of tweets, people are insulting with no repercussion - it’s a giant echo chamber of loud people. One thing it has done is to improve customer support by shaming companies publicly, which is a really sad state of affairs.
- mlindner 8y agoYour comment should have stayed dead, I don't know how you revived it. The board of directors demanding he delete his Twitter account is pointless. He would just refuse. Secondly, this has nothing to do with the FCC. Thirdly, your personal hatred of Twitter is completely off topic.
- halvingalg 8y agoTwitter is decidedly on-topic since it is Elon's misbehavior on twitter that got him into this whole mess.
- spectramax 8y agoYou’re right - SEC I meant, not FCC. I’m just speaking my mind, new to this site. Sorry to have disappointed you.
- Waterluvian 8y ago...Can a corporation demand an employee waive their right to speech as a private citizen? I think even if so, that's a terrible idea.
- 8y ago
- minimaxir 8y agoSEC filing: https://www.documentcloud.org/documents/5750664-Show-Cause.html https://www.documentcloud.org/documents/5750664-Show-Cause.h...
- shereadsthenews 8y agoWhy do people love to link to this awful PDF-rendering web page instead of the PDFs themselves? https://assets.documentcloud.org/documents/5750664/Show-Cause.pdf https://assets.documentcloud.org/documents/5750664/Show-Caus...
- berberous 8y agoThe last two pages (pp. 11 and 12) are a great example of why you shouldn't be an arrogant dumbass towards the government. The SEC quotes his 60 minutes interview with Leslie Stahl where he says he doesn't respect the SEC. While I think the SEC has a legitimate grievance here, I'm also guessing this is partly vindictive. Play stupid games... And I say all that as a big supporter of Elon generally.
- mlindner 8y agoGovernment being vindictive would count as evidence against the government, not for it.
- CPLX 8y agoIt goes to intent. Typically the law tries to at least somewhat take into account intent, like if someone omits something from a filing by accident or in a deliberate attempt to conceal, for example. Pointing out his statements demonstrates that he's aware of the rules and is choosing not to respect them. That's usually a sign that someone should be on the higher end of the typical punishment range for a given act.
- buboard 8y agoso, the intent was not to mislead investors, but to insult the fcc. snowflake committees much
- jordz 8y agoCan the SEC really do this given the content of this tweet? Surely they can’t seek approval for every tweet about Tesla? What if he says he’s driving home from “the Tesla factory”. Does this count as a breach if he didn’t seek approval?
- simplicio 8y agoThe order was to get approval for tweets that would have "material consequences for investors", so presumably just mentioning Tesla as part of his day to day routine would be fine. But honestly, its not like its that hard to just not tweet about Tesla.
- ypzhang2 8y agoIts about tweeting material information or disinformation about the company. If he's saying he's driving home from the Tesla factory, that isn't material information. Him tweeting that Tesla is going to make 500k vehicles is material information and needs to be vetted by the agreed upon process per the settlement.
- javagram 8y agoMusk and his lawyers agreed to the terms of the settlement. The only reason he had to settle in the first place was because he tweeted false, market-moving information via twitter. Maybe Elon should have considered the consequences then. Why didn’t he just hand over his twitter password to a social media manager and stop tweeting once he lost millions of dollars over the last tweet?
- toomuchtodo 8y agoHubris.
- slouch 8y agoClearly, he doesn't care that much.
- cmurf 8y agoWhy didn't the lawyers and board require it?
- deleted 8y ago[deleted]
- jijji 8y agoHe should really have a public relations spokesman/spokeswoman for this type of messages... Especially since this same situation already happened.
- reustle 8y agoNot sure why you're being downvoted. I totally agree, anyone with that much power and influence should want to make sure they are putting their best foot forward at all times.
- mlindner 8y agoSurely the SEC has something better to do than attack someone for tweeting.
- petee 8y agoOh, you mean like uphold the law?
- mlindner 8y agoHow about go after things that actually cause harm? The SEC should stop protecting those who wish to harm Tesla and actually act on behalf of shareholders. The shareholders don't want Elon out. If they did they would have voted him out.
- cat199 8y agodistorting share prices doesn't cause harm? i'm sure all of the poor Enron shareholders are mad at the SEC for the same reason, etc etc etc
- deleted 8y ago[deleted]
- privateSFacct 8y agoNot if that person has posted: 1) MAJOR false market moving information regarding a buyout with funding committed that both never happened and turned out to be basically hot air to get back at shorts 2) AGREED to pre-approval of tweets about tesla so that "mistakes" wouldn't happen again 3) Promptly tweaks another FALSE and market moving prediction about 2019 production (500K), which almost immediately leads to the resignation of Tesla General Counsel and then has to be corrected. This is overdue. When I first saw the tweet, I was like how in the heck is this getting pre-approval clearance - especially to have such a big increase from guidance (400K guidance, 500K was updated guidance!) One alternative - have Elon pay out of pocket to all the sorts and anyone else who losses money acting on his tweet addiction.
- true_tuna 8y agoCan someone post a non wsj link?
- detaro 8y agohttps://www.cnbc.com/2019/02/25/tesla-shares-fall-on-report-sec-asks-judge-to-hold-elon-musk-in-contempt-for-violating-deal.html https://www.cnbc.com/2019/02/25/tesla-shares-fall-on-report-...
- jaimex2 8y agoWSJ is usually first on anything negative regarding Tesla. Might have to wait a bit for others to pick the story up.
- yalogin 8y agoHe said the same thing in that podcast he did recently. The podcast he did with that company that says Tesla stock has multiple thousand upside.
- kevin_b_er 8y agoSo what's the potential punishment for this, assuming he's found in contempt?
- jaimex2 8y agoA fine.
- mjevans 8y agoThis is where a software solution might actually help. As an example, I've added some keywords to a script in my IRC client that if they exist the message is stopped by my client. In Elon Musks' case this should be Tesla (and probably some other court mandated muzzles) and should be on their Twitter clients, and other "designated publication channels" that the ruling covers. Why? Because remembering to not do things is a restraint that is extremely mentally burdensome and thus difficult to get correct 100% of the time. Also, this should probably apply to CEOs and other "public figures" as a general practice they work with through their PR and marketing firms. The fact that twitter and other platforms are closed only makes this innovation more difficult to add to end user clients.
- azima 8y agoyou mean like the dozens of tools out there used by corporation's to approve and manage tweets that their social media teams send out.
- roywiggins 8y agoMusk would start getting creative with a thesaurus.
- jacques_chester 8y ago1. Judges at this level are pretty smart. 2. They tend to take contempt seriously. 3. Especially if you double down on it.
- gamblor956 8y agoWhy? Because remembering to not do things is a restraint that is extremely mentally burdensome and thus difficult to get correct 100% of the time. When you're the CEO of a publicly traded company, getting paid millions in stock comp to run that company, you don't get to use the excuse "it's mentally burdensome". The whole reason they're in that position, getting paid those obscene amounts, is that they're supposed to be able to handle the burden. If they're not able to handle it, they should step aside for someone who can.
- blhack 8y agoMy knowledge of how publicly traded companies work is very limited, but: Was what he said really that bad? He said: >Tesla made 0 cars in 2011, but will make around 500k in 2019 And then later corrected himself with: >Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k. This seems like a pretty simple mistake to have made, and I have a tough time assigning malice to it. I like Elon. A lot. The news machine's constant thirst for scandal surrounding him is a cancer on our society, and it worries me that it then effects people who have the ability to enact their will with force: the judicial system. edit: and it honestly just seems like an honest mistake. He likely is constantly thinking of ways to improve the weekly output of Tesla, and then expanding that in his head to yearly production numbers. >Tesla made 0 cars in 2011, but will make around [/be at the correct pace to be making] 500k [a year] in 2019.
- deleted 8y ago[deleted]
- gamblor956 8y agoLast year Elon made a series of deliberately false statements made with the sole purpose of artificially inflating the stock price of his crime. CEOs have gone to jail for years over misrepresentations less outrageous than Elons'. He was able to avoid prison time and hundreds of millions in fines by agreeing to a slap-on-the-wrist settlement with the SEC that required a small fine and, crucially, that his tweets be reviewed by someone else at the company before they were posted. So that no more material mispresentations would spew forth...like the one the SEC is now saying violates the settlement agreement. If he wanted to keep tweet vomitting, he could have decided not to settle with the SEC last year and taken his chances.
- manicdee 8y agoHe did no such thing. You are probably referencing a series of tweets where Elon was openly contemplating what would be required to buy back Tesla shares. The settlement with SEC clearly stated that no fault was found and no guilt admitted. Why people get so excited about Musk spewing numbers over Twitter is beyond me, when the responsible course of action is to verify claims against other better vetted sources. The crowd was eager to hang Elon over “funding secured” despite the entire deal being dependent on shareholder agreement. The crowd is now eager to hang Elon over a typo. I think it’s the crowd that needs to delete Twitter, not Elon. Before you start discussing SEC rules remember these are all people who have been complicit in regulatory capture and they are all by definition the worst people for the job. They stood by while market manipulation was being performed daily through media publishing misleading stories in time to shake up morning trading. The SEC is corrupt to the core.
- eduah 8y agoGuidance for this year was 350k - 500k. Elon said several times on the call that he thought they could beat the 500k. This is a technicality on not getting approval for a tweet that could unreasonably be interpreted as saying they are definitely hitting 500k 8 months from now. This is stupid. https://twitter.com/_jameshatfield_/status/1100177298723094528 https://twitter.com/_jameshatfield_/status/11001772987230945...
- cat199 8y agoas stupid as tweeting incorrectly and without legal review when tweeting correctly and with review is essentially your simple, easy to observe, 'terms of parole'?
- eduah 8y agoActual government legal agency going after someone on a stupid immaterial technicality about requiring approval for disclosing material information that might affect stock: The tweet didn't have material information. The 500k number was public and discussed on a public investor call. vs. Crazy guy that bankrupted himself trying to build a rocket company and a car company simultaneously is less than overly cautious about his tweeting and how it could be used in bad faith by a government legal agency in the USA to persecute him.
- jacques_chester 8y agoHe publicly bragged. That's not "less than overly cautious" behaviour. That's flat out arrogance.
- 00N8 8y agoas a former sociology major, I'm pretty sure the judicial system still spends much of its time on cases w/ less merit than this
- joshuamorton 8y ago350-500k annualized, not 500k for the year. That exactly what the follow up tweet which was vetted clarifies.
- staticautomatic 8y agoI think the answer should be designating official channels like the company's website or an SEC-managed site that you can post to. Everything else gets designated non-official and carries a warning notice saying it's not official so if you wanna trade on it or whatever you do so at your own risk.
- jacques_chester 8y agoSuch designations already exist. Tesla designated Musk's twitter account several years ago.
- staticautomatic 8y agoWhere can I read more about this?
- desdiv 8y agoTesla's filed a SEC form 8-K[0] on 2013-11-05 that elevated both Musk’s and Tesla’s Twitter accounts to Disclosure Channels: >Tesla Disclosure Channels To Disseminate Information >Tesla investors and others should note that we announce material information to the public about our company, products and services and other issues through a variety of means, including Tesla’s website, press releases, SEC filings, blogs and social media, in order to achieve broad, non-exclusionary distribution of information to the public. We encourage our investors and others to review the information we make public in the locations below as such information could be deemed to be material information. Please note that this list may be updated from time to time. >Interested in keeping up with Tesla? >For more information on Tesla and its products, please visit: teslamotors.com >For more information for Tesla investors, please visit: ir.teslamotors.com >For the latest information from Tesla, including press releases and the Tesla blog, please visit: teslamotors.com/press >For additional information, please follow Elon Musk’s and Tesla’s Twitter accounts: twitter.com/elonmusk and twitter.com/TeslaMotors [0] http://ir.tesla.com/node/13651/html http://ir.tesla.com/node/13651/html
- 8y ago
- stevespang 8y agoHe is a revolutionary guy, but somebody needs to take his cellphone away from him so he cannot tweet - - sorry Elon. Tweeting is the same as "running off at the mouth"
- deleted 8y ago[deleted]
- jaimex2 8y agoMarket knee jerked as usual. Good time to buy TSLA shares.
- krferriter 8y agoThe fact this is how our economy and retirement savings are structured is absurd to me.
- jaimex2 8y agoThrown around the worlds largest casino as a facade for investment? Yep.
- soheil 8y agoAt least we got him to host meme review [1] before he goes to jail [1] https://www.youtube.com/watch?v=zpWYQ1YtgnI https://www.youtube.com/watch?v=zpWYQ1YtgnI
- burlesona 8y agoTo me, the real shame is that he wasn’t able to actually take Tesla private last year. He loves being the public mouth of his companies and clearly can’t restrain himself from tweeting material information. Would be fine if Tesla weren’t public :/
- jaimex2 8y agoYep. A deal with the devil they had to make to let Tesla be where it is today. Musk should just talk about the tech instead of the numbers though. The SEC are under pressure to bite Tesla for anything it does out of line.
- malshe 8y agoI am surprised by the number of people here as well as on Twitter confusing between "annualized" and "annual". If I make 1% trading a stock in one day then the annualized return is (1.01^365 - 1) * 100 = 3,678% but that's not the annual return! In case of Tesla, I think the annualized target production of 500K cars was calculated over 3 quarters (please feel free to correct me).
- ENGNR 8y agoNever go public. It's solely for the bean counters selling Pepsi and Coachella