Quoted Musk: "Am considering taking Tesla private at $420. Funding secured."
- "Am considering" - not announcing Tesla going private but something he wants but not yet achieved.
- "taking Tesla private at $420." - a goal, not an announced accomplishment.
- "Funding secured." - so the question is could Musk have been misled?
To me, this is the only part of the government case that may have standing. So let's take a close look:
"3. Musk knew or was reckless in not knowing . . ." - Here the government claims either "Musk knew" or "not knowing." Short of an essay by Musk on the legal requirements of how a company goes private or even a corporate takeover is done, this is a heavy lift. There is nothing else but an outline of the steps needed to go private. This would be an excellent outline for a business school class on 'how it is done.'
Silly statement "4. Investors reacted ..." simply goes back to stocks are a gamble. Their reactions have no bearing on whether or not Musk was misled on "
Funding secured." The following "5. Musk's ..." is a restatement of #4.
Addressing the legal basis, "6. By engaging in the conduct
alleged ..." which means it is something to be decided in a jury trial. Items 7-9 are restating the legal basis.
Now in terms of remedies, "10. ...
Musk oversees all product development, engineering, and design of Tesla's products." Now the SEC has identified how critical Musk has been to Tesla operations. This significantly risks the future of Tesla as a company because as restated in "11.
Tesla, which designs, develops, manufactures, and sells electric vehicles and energy generation and storage systems ..."
Statements 12-14 assert that Musk uses Twitter. Good thing no one else like the President of the USA does this." Fine, it is laying out how Musk communicates.
Statement 15 describes how 'short' sellers operate. In "16. ...
Tesla has been unfairly targeted by short sellers ..."
Statement 17-18 says Musk met with Saudi Investment Fund. Now we get to "19. ...
he assumed the the lead Fund representative was proposing a "standard" going-private transaction ..." Now even the government states Musk had 'assumed' which is a far from a deliberate act to mislead others. Restating the government claim, "20-22" are more details about Musk's understanding or misunderstanding. Again, the government provides a step-by-step list of what would be required.
Statements 23-59 shows Musk learning how going private is handled, a painful lesson. But there is a big gap between venial and accidental. Then "60. On the next trading day ..." again the stock gamblers were playing.
Statements 61-67 more on the education of Musk. Then we go full circle to:
"Musk Knew or Was Reckless in Not Knowing ..."
Again, the government eviscerates their claim by "
Not Knowing."
Statements 68-74 again claims facts not in evidence, the knowledge Musk had about what it takes to go from a public to a private corporation. He knew the advantages of stability to the SpaceX stock prices versus the wide spread, baseless speculations of financial 'news.'
Statements 75-77 restates the stock gamblers went for a ride.
It ends with the "CLAIM FOR RELIEF" which for completeness are:
I. Finding that Defendant violated the provisions of the federal securities laws as alleged herein;
To be determined at trial. There is a open question of intent versus ignorance.
II. Permanently restraining and enjoining Defendant from, directly or indirectly, engaging in conduct in violation of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5];
Citing the statute, kinda redundant.
III. Ordering Defendant to disgorge, with prejudgment interest, any ill-gotten gains received as a result of the violations alleged herein;
Facts not detailed in the allegations. Had Musk sold or bought stock at the time, game, set, point but I didn't find Musk had made any gains in the allegations. Can you find any?
IV. Ordering Defendant to pay civil penalties pursuant to Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)];
Pay the fine after adjudication.
V. Ordering that Defendant be prohibited from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C.
§ 78l] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)]; and
This is a sensitive point because Musk is the chief engineer. Loss of his engineering expertise would be the SEC fatally shutting down Tesla.
VI. Granting such other and further relief as this Court may deem just, equitable, or necessary.
Pointing a finger and saying TISK TISK TISK.
Bob Wilson
The guilty verdict on the "conspiracy" charge, and I'm guessing also the "obstruction of justice" charge, would seem to be a result of either insider trading, or an attempt to cover that up, or both.