The S.E.C.'s actual claim against Elon Musk - Explained



We’ll lay this out straightforwardly for you if you happen to be curious what the basis for the S.E.C. going after Elon Musk is:

Elon Musk tweeted a couple months ago that he was considering taking Tesla private. He was likely just annoyed with the mass media and financial market speculators incessantly obsessing over him like a gang of rabid mosquitos, but in the end, there’s consequences to a public company going private. In order for a public company to go private, the new private investors have to buy all the shares of public stock back from the public individual investors. Elon Musk mused that the buyback price would be roughly $420. The current stock price at the time of him saying this was something like $370. That means that anyone who purchased shares in the company at $370 would have them bought back from them at $420, earning them a free profit of $50 per share. Presumably, a bunch of financial a-holes went and actually did this, buying thousands of shares in Tesla to try and get free money out of the deal. When Musk didn’t end up taking the company private, and the stock fluctuated per normal as stocks do, presumably again these financial a-holes were left holding a copious amount of Tesla stock that went down in value over $100 per share. They presumably got furious over all this, and complained to the S.E.C. that Musk had “defrauded potential investors”.

The S.E.C. then did an investigation and concluded that Musk had no concrete plans to take the company private, and so all his twitter musings were a violation of financial regulatory code. They deemed that he had “defrauded investors”.

We get it. By the letter of the regulatory law the S.E.C. and whining opportunistic investors have a case they can get away with substantiating. Still, like we said in the last article, it runs afoul on a deeper and much more common sensical level... A level in which trust in whole institutions erodes and cynicism proliferates. Wouldn’t a slap on the wrist, telling him to be careful of doing such things in the future, be more fitting? 

Shoot, Who knows these days?

Royce White