> The $40 million in penalties will be distributed to harmed investors under a court-approved process.
Does that mean the people who got their shorts called? That is kind-of the opposite of being an investor. It would be odd if Tesla would have to look after their best interest.
> Musk and Tesla will each pay a separate $20 million penalty. The $40 million in penalties will be distributed to harmed investors under a court-approved process.
Well, the stock has done somersaults in all directions since then (benefiting both longs and shorts.) I wonder who would be eligible for part of this payout.
Related question regarding burning the shorts. The SEC said the $40 million in fines would go to aggrieved investors in a court approved process. But the people who were hurt the most by Musk's initial tweet were short sellers with stop loss orders. But I don't think they would classify as "investors", considering they profit when TSLA goes down.
Does anyone know how this process works, or do you think short sellers would have a claim to some of that $40 million?
> it’s seeking a range of relief, including compensatory damages (including wages owed), as well as declaratory relief, pre- and post-judgment interest, plus other attorneys’ fees and costs.
So, the penalty is paying workers the wages they would have been paid anyway under proper notice, plus interest? So for basically ~5-8% more Musk gets to terminate everyone today instead of in 60 days.
> Tesla shareholders as a class aren't the harmed party the SEC seeks to address a harm to, they are the principal who failed to adequately supervise their agent who is the bad actor in this case, which is why Tesla as well as Musk is, even with the settlement, paying a fine.
Then why did the SEC say "The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders"?
You’re trying to define investors as only people owning Tesla stock. The SEC specifies the penalties will go to investors hurt by Musks actions, which I take to mean stock market investors who Elon targeted by using his position as ceo to spread information that he knew to be misleading in order to harm their positions. It doesn’t really make sense to try and define ‘equal justice’ from the vantage point of those people who were helped by the illegal actions in question.
> The plaintiffs...assert that Mr. Musk’s actions were responsible for the losses they suffered on Tesla’s stock movements.
So what law are they actually asserting that Musk broke? That a CEO is incentivized to act in the interest of the company's shareholders? Honest question, what specific laws come into play here - is it about stock manipulation?
Also, can what happened be legally considered as a "loss" if an investor never cashed out? AFAIK, that would make it an unrealized loss, analogous to unrealized gains which typically don't officially result in any net change until the asset is sold.
> The SEC offered a deal that did not include Musk being banned. If they wanted him banned, why would they have offered such a deal?
Because the SEC, like most other litigants, is willing to accept less than its ideal solution for a certain, cheap, immediate, and final resolution; what you seek going to court is everything you would ever want, what you ask for in a settlement is may be more than the minimum you will accept (if you want negotiating room, OTOH, you may want to do a best offer to maximize the chance of immediate acceptance and just move on to litigation if that fails) but will always be less than everything you would want, unless your case is so strong that you view settlement as basically a gift of swift resolution of a foregone conclusion to the other side, which is rare.
> The other big factor is that removing Musk as CEO would have caused more harm to Tesla shareholders than Musk’s tweets did.
Tesla shareholders as a class aren't the harmed party the SEC seeks to address a harm to, they are the principal who failed to adequately supervise their agent who is the bad actor in this case, which is why Tesla as well as Musk is, even with the settlement, paying a fine.
>Besides the SEC, which is a criminal investigation
I thought SEC only has civil powers. SEC could force Musk out of Tesla but couldn't levy any criminal charges. Only the DOJ can bring criminal indictments.
The shareholders that were supposedly wronged didn't get anything from the SEC action.
It's comparable to criminal and civil law existing side-by-side: if you run a red light and someone gets hurt, you'll be fined for the traffic violation. But the victim is also going to sue you for medical expenses, work income missed, and compensation for any suffering.
Of course any compensation here is going to be paid by Tesla to shareholders of Tesla, who own the company anyway. It might make a difference for individuals based on when they are/were shareholders and when not. But absent such effects, it's a really strange system.
I wonder if Elon Musk will join the lawsuit. He's the single largest victim here, after all. That would be fun.
“Musks gets away with paying the ’things fell through on my end but without fault’ fee” (designed mostly for failure of financing despite Musk fulfilling his good faith commitments to make it happen) seems by far the least likely scenario, especially if the case reaches trial (it's just barely plausible as a settlement if it doesn't.)
Does that mean the people who got their shorts called? That is kind-of the opposite of being an investor. It would be odd if Tesla would have to look after their best interest.
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