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Elon Musk Just Had His First Margin Call for Twitter Loan

• Zigurd 4y ago
  From the Tesla proxy statement for 2022: > In order to mitigate the risk of forced sales of pledged shares, the Board has a policy that limits pledging of Tesla stock by our directors and executive officers. Pursuant to this policy, directors and executive officers may pledge their stock (exclusive of options, warrants, restricted stock units or other rights to purchase stock) as collateral for loans and investments, provided that the maximum aggregate loan or investment amount collateralized by such pledged stock does not exceed twenty-five percent (25%) of the total value of the pledged stock. In other words, Tesla directors and executive officers are supposed to keep their margin debt under 25% of share value, regardless of the terms of their margin loans. Several Tesla insiders had a very large percentage of their shares pledged against margin loans before the price declined by 70%. I expect Elon is not the only one who needs to check up on their compliance.
  • papito 4y ago
    It's a "policy", not a law. I have almost zero confidence that Elon even cares. He has snubbed the SEC multiple times. As if he cares about his sycophantic board. Musk would literally backtrack on his own "policies" on Twitter within hours. Who are we kidding?
    • Zigurd 4y ago
      You are correct. As far as I can tell the only recourse for shareholders is to sue the board.