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Strange legal choices wrt to the SEC? Just wait for the judge decision: the SEC is in a clear overreach here, as all the tweets they cited in their filing are n

Strange legal choices wrt to the SEC? Just wait for the judge decision: the SEC is in a clear overreach here, as all the tweets they cited in their filing are non material. They even misquoted the tweet to say "500K" instead of "about 500K" and anyone can add up the previsouly published numbers to conclude the company should reach a runrate of 500K at the end of the year (Musk tweeted nothing new, it was already disclosed in the quarterly report). You'll see.

duxup 8y ago
It's a strange legal choice when you could just not tweet stuff that any lawyer would tell you not to, first to get in trouble, then to extend it...
- rcMgD2BwE72F 8y ago
  Unless it gives Tesla/Musk the opportunity to prove that the SEC is abusive and get a judge to formalize this.
Rebelgecko 8y ago
There's potentially a very large difference between the number of cars made in 2019, and the extrapolated production rate at the end of 2019 (e.g. number of cars made in the last week of December * 52). I could be wrong but I don't think that before the tweet there were any previous filings or announcements saying that Tesla would build 500,000 cars this year.
- Klathmon 8y ago
  >I could be wrong but I don't think that before the tweet there were any previous filings or announcements saying that Tesla would build 500,000 cars this year. I'm fairly certain that during the Q4 2018 earnings call they talked about expecting to deliver between 350,000 and 500,000 cars in 2019. I'm not a lawyer, I don't know much about public companies or regulations, so I don't know if that counts or not (or if saying "500,000 in 2019" is hugely different than "between 350,000 and 500,000 in 2019"), but it's not like the 500,000 was never said before.
  - gamblor956 8y ago
    The problem isn't that the 500k was never said before. The problem was that the original use of the 500k was part of a ranged estimate with a great deal of uncertainty (approximately 30-45%), but Musk's original problematic tweet eliminated all of that uncertainty. The elimination of uncertainty is material information to investors. And the original tweet was also simply wrong. Musk had to correct in a followup tweet about the 500k being an annualized rate.
    - dd36 8y ago
      From the Tesla court filing: "As noted above, on January 2, 2019, Tesla filed a Form 8-K reporting its Q4 2018 production of “25,161 Model S and X vehicles, consistent with our long-term run rate of approximately 100,000 per year.” Then, during the January 30 Earnings Call, Musk stated that Model 3 production in 2019 would be on the order of “350,000 to 500,000” vehicles. Tesla similarly disclosed in its January 30 Update and February 19 Form 10-K that it was “targeting annualized Model 3 output in excess of 500,000 units sometime between Q4 of 2019 and Q2 of 2020.”" So 2019 production estimate was 450,000-600,000 and the SEC felt compelled to file for contempt over a tweet that said about 500,000 units... This is so frivolous, it's embarrassing.
- rcMgD2BwE72F 8y ago
  That's a production run rate, not a production total.
gamblor956 8y ago
The judge will definitely not rule that the SEC is in "clear overreach" since the 500k tweet is only one of the many tweets they cite in their filing as evidence that Elon has violated his settlement agreement. The 500k tweet was just the final straw. Also, with respect to the "previously published numbers," Tesla provided a range of 360k to 500k. A large range, indicating significant uncertainty. Musk's tweet narrowed that range quite drastically to the upper-high end (i.e., "about 500k"), indicating substantially less uncertainty about Tesla's capacity. That is materially new information. Moreover, Musk's comment was that Tesla would make 500k cars in 2019, not make cars at an annualized rate of 500k/year at the end of the year. He had to correct that tweet with a followup, but the followup tweet also contained material information: he narrowed the 2019 delivery estimate of 400k. Musk is going to face some penalty for violating the settlement agreement. No one is sure what that will be. He'll probably still be CEO afterward, but he'll definitely be a few million poorer...and it's likely that Tesla will also pay another monetary penalty for its failure to uphold its part of the settlement agreement.
- dd36 8y ago
  Doubtful. The SEC tried to pad its complaint in its reply. That's not an indication of strength.
  - frosted-flakes 8y ago
    What motivation would they have for doing that? Genuinely curious (I don't care either way).
    - dd36 8y ago
      So the complaint is filed then Tesla can provide an answer and the SEC a reply to that answer. A reply is usually brief and reiterates points made in the original complaint. Here, however, the SEC introduced new arguments in its reply. This usually happens because the defendant's answer was strong. Therefore, the SEC seemingly believed its original complaint was insufficient. As such, the SEC is at a higher probability of looking bad here.

duxup 8y ago

It's a strange legal choice when you could just not tweet stuff that any lawyer would tell you not to, first to get in trouble, then to extend it...

rcMgD2BwE72F 8y ago
Unless it gives Tesla/Musk the opportunity to prove that the SEC is abusive and get a judge to formalize this.

Rebelgecko 8y ago

There's potentially a very large difference between the number of cars made in 2019, and the extrapolated production rate at the end of 2019 (e.g. number of cars made in the last week of December * 52). I could be wrong but I don't think that before the tweet there were any previous filings or announcements saying that Tesla would build 500,000 cars this year.

Klathmon 8y ago
>I could be wrong but I don't think that before the tweet there were any previous filings or announcements saying that Tesla would build 500,000 cars this year. I'm fairly certain that during the Q4 2018 earnings call they talked about expecting to deliver between 350,000 and 500,000 cars in 2019. I'm not a lawyer, I don't know much about public companies or regulations, so I don't know if that counts or not (or if saying "500,000 in 2019" is hugely different than "between 350,000 and 500,000 in 2019"), but it's not like the 500,000 was never said before.
- gamblor956 8y ago
  The problem isn't that the 500k was never said before. The problem was that the original use of the 500k was part of a ranged estimate with a great deal of uncertainty (approximately 30-45%), but Musk's original problematic tweet eliminated all of that uncertainty. The elimination of uncertainty is material information to investors. And the original tweet was also simply wrong. Musk had to correct in a followup tweet about the 500k being an annualized rate.
  - dd36 8y ago
    From the Tesla court filing: "As noted above, on January 2, 2019, Tesla filed a Form 8-K reporting its Q4 2018 production of “25,161 Model S and X vehicles, consistent with our long-term run rate of approximately 100,000 per year.” Then, during the January 30 Earnings Call, Musk stated that Model 3 production in 2019 would be on the order of “350,000 to 500,000” vehicles. Tesla similarly disclosed in its January 30 Update and February 19 Form 10-K that it was “targeting annualized Model 3 output in excess of 500,000 units sometime between Q4 of 2019 and Q2 of 2020.”" So 2019 production estimate was 450,000-600,000 and the SEC felt compelled to file for contempt over a tweet that said about 500,000 units... This is so frivolous, it's embarrassing.
rcMgD2BwE72F 8y ago
That's a production run rate, not a production total.

gamblor956 8y ago

The judge will definitely not rule that the SEC is in "clear overreach" since the 500k tweet is only one of the many tweets they cite in their filing as evidence that Elon has violated his settlement agreement. The 500k tweet was just the final straw. Also, with respect to the "previously published numbers," Tesla provided a range of 360k to 500k. A large range, indicating significant uncertainty. Musk's tweet narrowed that range quite drastically to the upper-high end (i.e., "about 500k"), indicating substantially less uncertainty about Tesla's capacity. That is materially new information. Moreover, Musk's comment was that Tesla would make 500k cars in 2019, not make cars at an annualized rate of 500k/year at the end of the year. He had to correct that tweet with a followup, but the followup tweet also contained material information: he narrowed the 2019 delivery estimate of 400k. Musk is going to face some penalty for violating the settlement agreement. No one is sure what that will be. He'll probably still be CEO afterward, but he'll definitely be a few million poorer...and it's likely that Tesla will also pay another monetary penalty for its failure to uphold its part of the settlement agreement.

dd36 8y ago
Doubtful. The SEC tried to pad its complaint in its reply. That's not an indication of strength.
- frosted-flakes 8y ago
  What motivation would they have for doing that? Genuinely curious (I don't care either way).
  - dd36 8y ago
    So the complaint is filed then Tesla can provide an answer and the SEC a reply to that answer. A reply is usually brief and reiterates points made in the original complaint. Here, however, the SEC introduced new arguments in its reply. This usually happens because the defendant's answer was strong. Therefore, the SEC seemingly believed its original complaint was insufficient. As such, the SEC is at a higher probability of looking bad here.