Elon Musk Attacks SEC

Elon Musk. The Summit 2013 - Photo by Dan Taylor / Heisenberg Media.

It started with a tweet.

On August 7th, Elon Musk revealed to his millions of Twitter followers one of his thoughts.  This is a standard use of Twitter.

Elon Musk is not an average person, however.  He is the CEO of Tesla, and he was musing about the future of his company.  “Taking Tesla private” means buying up the available public shares in his company, and owning it completely.  Currently, Tesla is not a private company, it is a publicly traded one.  That means it is listed on one of the stock markets and the actions of its key management are watched by the Securities and Exchange Commission (SEC).

As with any CEO speaking about his public company, his statements are examined closely by investors.  His statement about taking the company private sparked an immediate surge in stock purchasing by people eager to sell at the higher price of $420/share, giving Tesla a huge and immediate cash infusion.

The SEC investigated the claim, and found one big error: no such funding had been secured.  This encouraged them to file suit against him for fraud.

Musk, however, had meant the tweet as a joke.  The $420 reference was meant to be to 420, a “pot holiday” in the United States.

Musk reached a settlement with the SEC on Saturday, by which Musk will step down as the chairman of Tesla but will remain its CEO, and $20 Million each will be paid by both Musk and his company, Tesla.

The settlement has yet to be finalized… but Musk is obviously bitter, and has returned to Twitter to vent.

“Shortsellers” are a type of investor who speculates with property they do not currently own, expecting it to drop.  The most famous pop-culture demonstration of it occurs toward the end of the movie Trading Places.  As indicated in the film, it is a risky style of investment and one very vulnerable to fraud.

Tesla shares fell immediately after the latest tweet.

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About AlienMotives 1991 Articles
Ex-Navy Reactor Operator turned bookseller. Father of an amazing girl and husband to an amazing wife. Tired of willful political blindness, but never tired of politics. Hopeful for the future.