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This one feels a bit witch-hunty, the "500k" number he tweeted wasn't meant to be some new accurate prediction, but a reiteration of their public position, to m

This one feels a bit witch-hunty, the "500k" number he tweeted wasn't meant to be some new accurate prediction, but a reiteration of their public position, to make a general point about how quickly they've grown over the years.

spenczar5 8y ago
One of the burdens for securities fraud is "materiality" - whether a "reasonable investor" would have viewed the relevant information "as having significantly altered the total mix of information made available." Analysts were generally projecting 400k cars delivered. Musk, the CEO, the ultimate insider, suddenly reveals that Tesla will sell 25% more cars than people outside expected. I think it's fair to say that if that came as a press release from the company, the mix of information certainly would have changed and people would buy the stock. The SEC agreement was that he would pre-clear any material tweets with a lawyer. He said in a TV interview that he wouldn't get his tweets pre-cleared, and said "I want to be clear. I do not respect the SEC. I do not respect them.” And then he tweeted material information on Tesla. I think it's pretty fair to call that contempt of court!
- extrapickles 8y ago
  So you can be in contempt now if you don’t match what analysts are saying? The definition of materiality you provided clears him as the numbers Musk tweeted are in the their quarterly report, so nothing new was learned.
  - spenczar5 8y ago
    > So you can be in contempt now if you don’t match what analysts are saying? "Materiality" is weird, I agree! Matt Levine has a running line that "everything is securities fraud" these days. To be clear, he is in contempt of the court order around materiality. In general, not matching what analysts say isn't contempt of court, of course. > The definition of materiality you provided clears him as the numbers Musk tweeted are in the their quarterly report, so nothing new was learned. I do not agree. The quarterly report says "our goal is to be able to produce 10,000 vehicles per week on a sustained basis. Barring unexpected challenges with Gigafactory Shanghai, we are targeting annualized Model 3 output in excess of 500,000 units sometime between Q4 of 2019 and Q2 of 2020." The tweet said "“Tesla made 0 cars in 2011, but will make around 500k in 2019.” Those are very, very different statements! Musk's tweet indicates dramatically higher production at the end of 2019.
- jsight 8y ago
  Keep in mind that both the statement and the correction came while the markets were closed. This isn't about market manipulation. This is about whether or not he intentionally crossed an arbitrary line by vaguely restating previous official company statements in an unofficial manner without complying with company policy on said utterance.
  - spenczar5 8y ago
    Right, this is about contempt of court, not actual fraud, good point. It sounds like you think "contempt of court" shouldn't matter. I think it should. It's hard to have a society with rule of law if people ignore court orders, even cool people like Elon.
    - jsight 8y ago
      Contempt of court matters, but it is also a high bar. It remains to be seen if the court will determine that a fellow saying "I love the courts, I'm sorry about the things that I said outside of trading hours" is in contempt. My guess is that the SEC's definition and the court's definition will not agree. Before disagreeing with this, go back and read the terms of the original settlement. A lot of people are talking smack (on both sides) about things that aren't even in that agreement.
      - spenczar5 8y ago
        I've only read the SEC's motion (https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/ragxTxYirOxo/v0 https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/ragxTxYi...). I haven't been able to track down the court's final judgement document in the settlement. That said, I don't agree with your portrayal here. The SEC's claim is just that Musk didn't pre-clear the tweet, which was a court-backed requirement in the settlement, which makes him in contempt of court. The other stuff, like about the TV interview, is evidence that he's not acting in good faith, so the court shouldn't cut him slack here - or, in the motion's words, that he "has not made a diligent or good faith effort to comply with the provision of the Court’s Final Judgment requiring pre-approval of his written communications about Tesla. Less than two months after the Court entered its Final Judgment, Musk publicly indicated that he was not serious about compliance with this provision."
jahewson 8y ago
Because of his previous statements, Musk is under a court-backed legal agreement with the SEC not to make such statements without getting pre-approval from company officials. This isn't just the SEC he's ignoring, it's the court. This is sales forecast and a 25% exaggeration of the real numbers, which on its own appears to be "misleading information" and he'd likely be in trouble with the SEC for it either way but by ignoring the court he's in double trouble.
xkjkls 8y ago
Even re-iterating guidance that you issued a month ago is a material, as the government describes at length in the court filing.

spenczar5 8y ago

One of the burdens for securities fraud is "materiality" - whether a "reasonable investor" would have viewed the relevant information "as having significantly altered the total mix of information made available." Analysts were generally projecting 400k cars delivered. Musk, the CEO, the ultimate insider, suddenly reveals that Tesla will sell 25% more cars than people outside expected. I think it's fair to say that if that came as a press release from the company, the mix of information certainly would have changed and people would buy the stock. The SEC agreement was that he would pre-clear any material tweets with a lawyer. He said in a TV interview that he wouldn't get his tweets pre-cleared, and said "I want to be clear. I do not respect the SEC. I do not respect them.” And then he tweeted material information on Tesla. I think it's pretty fair to call that contempt of court!

extrapickles 8y ago
So you can be in contempt now if you don’t match what analysts are saying? The definition of materiality you provided clears him as the numbers Musk tweeted are in the their quarterly report, so nothing new was learned.
- spenczar5 8y ago
  > So you can be in contempt now if you don’t match what analysts are saying? "Materiality" is weird, I agree! Matt Levine has a running line that "everything is securities fraud" these days. To be clear, he is in contempt of the court order around materiality. In general, not matching what analysts say isn't contempt of court, of course. > The definition of materiality you provided clears him as the numbers Musk tweeted are in the their quarterly report, so nothing new was learned. I do not agree. The quarterly report says "our goal is to be able to produce 10,000 vehicles per week on a sustained basis. Barring unexpected challenges with Gigafactory Shanghai, we are targeting annualized Model 3 output in excess of 500,000 units sometime between Q4 of 2019 and Q2 of 2020." The tweet said "“Tesla made 0 cars in 2011, but will make around 500k in 2019.” Those are very, very different statements! Musk's tweet indicates dramatically higher production at the end of 2019.
jsight 8y ago
Keep in mind that both the statement and the correction came while the markets were closed. This isn't about market manipulation. This is about whether or not he intentionally crossed an arbitrary line by vaguely restating previous official company statements in an unofficial manner without complying with company policy on said utterance.
- spenczar5 8y ago
  Right, this is about contempt of court, not actual fraud, good point. It sounds like you think "contempt of court" shouldn't matter. I think it should. It's hard to have a society with rule of law if people ignore court orders, even cool people like Elon.
  - jsight 8y ago
    Contempt of court matters, but it is also a high bar. It remains to be seen if the court will determine that a fellow saying "I love the courts, I'm sorry about the things that I said outside of trading hours" is in contempt. My guess is that the SEC's definition and the court's definition will not agree. Before disagreeing with this, go back and read the terms of the original settlement. A lot of people are talking smack (on both sides) about things that aren't even in that agreement.
    - spenczar5 8y ago
      I've only read the SEC's motion (https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/ragxTxYirOxo/v0 https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/ragxTxYi...). I haven't been able to track down the court's final judgement document in the settlement. That said, I don't agree with your portrayal here. The SEC's claim is just that Musk didn't pre-clear the tweet, which was a court-backed requirement in the settlement, which makes him in contempt of court. The other stuff, like about the TV interview, is evidence that he's not acting in good faith, so the court shouldn't cut him slack here - or, in the motion's words, that he "has not made a diligent or good faith effort to comply with the provision of the Court’s Final Judgment requiring pre-approval of his written communications about Tesla. Less than two months after the Court entered its Final Judgment, Musk publicly indicated that he was not serious about compliance with this provision."

jahewson 8y ago

Because of his previous statements, Musk is under a court-backed legal agreement with the SEC not to make such statements without getting pre-approval from company officials. This isn't just the SEC he's ignoring, it's the court. This is sales forecast and a 25% exaggeration of the real numbers, which on its own appears to be "misleading information" and he'd likely be in trouble with the SEC for it either way but by ignoring the court he's in double trouble.

xkjkls 8y ago

Even re-iterating guidance that you issued a month ago is a material, as the government describes at length in the court filing.