>It sounds like "the banks," who would be in an even more privileged position to know if the $420 offer was legitimately secured
Speculation. What's not speculation however is that the company suffered material harm as a byproduct of malicious prosecution.
If I, as a government employee, open a public investigation into someone whom I know to be innocent and cause that entity harm I have incurred liability. The SEC knew Elon had the funding, they used weasel words to imply he did not. The SEC would have lost in court. _All_ contracts have contingencies, this was no different. Saying that because a contingency existed the funds were "not secure" is horsecrap.
> What part of "I have secured funding for taking Tesla private" was accurate and honest?
We don't know. He might have chosen to not disclose his discussions with other people.
> If he had not secured funding, how was his statement not deceptive?
He might have meant it in earnest. For fraud, surely he must have had the intention to profit from it personally at the expense of shareholders?
> And if you sold shares based on his statement,
Who would have done that and with what reasoning? Why would you sell for a lower price if you believed you'd get $420 very soon? That's a silly notion.
> a fraudulent pyramid scheme
A pyramid scheme is by definition a system where most (i.e. the last) investors get screwed, i.e. they don't make a profit.
> Of course the SEC is looking into this. I can’t think of a thing that the SEC would look into more. If Warren Buffett was giving insider tips about accounting fraud at the Fed to Lloyd Blankfein so that he could help Donald Trump and the pope insider trade against the Illuminati, the SEC team investigating that would be scheming to get transferred to the Elon Musk team.
Obviously, this is a silly article. But the point remains: Mr. Musk clearly put himself at risk with that tweet. The core questions are:
1. Was Mr. Musk telling the truth about "secured funding" ?
2. What is the SEC's plan of action on investigating this matter?
The opinion piece otherwise doesn't contribute much information, aside from giggles and snide comments. It will be a mystery. Feds often don't like talking about pending cases, so it could be weeks, or even months, before any official action comes down from this. And who knows? Maybe Musk really is telling the truth about secured funding and there's no fraud involved.
EDIT: Yo downvotes: care to explain why you're downvoting a direct quote from the article? As I stated above: the opinion piece is clearly a silly piece of work that doesn't contribute much to the discussion. The core facts are still "at large" and we really won't get much information on this matter for weeks and/or months. That's really all there is to this story.
> if he's able to show he really thought funding could have been secured but fell through
"Funding secured" and "funding to be secured" are materially different terms. The point of "secured" is it's been bindingly, definitively agreed upon in a way that makes falling through very, very difficult.
His best defense is, absurdly, arguing a seasoned CEO doesn't understand what "funding secured" means. He might be about to inject enough doubt into a jury to avoid criminal charges, but I don't think that will outweigh the preponderance of evidence which is required for a civil judgement.
> The involvement of the banks was always the confusing part of that deal. Really made me lose respect for their judgement.
Agreed, but to be fair the bank transactions were for debt rather than equity, so they will still end up ahead unless he really does drive the company to bankruptcy. That’s a real possibility, but they’re in better shape than the equity investors who have in one public case[1] already written down the investment 47%.
> The only money they have is from an unregistered sale of securities which was only undertaken because they HAD NO MONEY.
Don't you think this would come out at trial? Sounds like the only reason they came out with an unregistered ICO was in order to generate revenue it needed to continue operating. That's a huge red flag for me if I'm an SEC investigator
> Except he actually did consider it and negotiated with investors. How is it fraught when you investigate a business opportunity?
Even if what said was 'truthful', he would have filed is intentions with the SEC to begin with but didn't. Actions speak louder than words and he still hasn't done anything to take Tesla private after paying for the charges.
> So many salty shorts itt.
Shorted what? Yeah I shorted NKLA [0], and told everyone to do so in the open and laughed all the way to the bank.
> I think it was pretty clear that he was thinking about Saudi / middle east / Norwegian / sovereign wealth type funding on equity side. Then debt for rest if needed.
He was "thinking"? That's not funding secured. Why have all of these institutions specifically denied having discussed it at the time too? Either it wasn't these institutions, or funding was very far from secure at the time he claimed it was.
> It wasn't a $100B deal. Many larger investors would rolled their holdings into the private entity - Elon alone would have. $40 - $50B. If debt is in mix equity portion even smaller. It would have been the deal of the century.
If you are going to get investors for something like this, you're also going to roll over all the debt/options that you have on your books as well. It would have been close to ~100 billion, the largest LBO ever done.
> And yes - discussions like this happen with some frequency - and it's not a scandal if the deal doesn't close - you just don't usually read about them.
You don't read about them because the CEO doesn't announce they secured funding for one in the middle of trading. You know, the responsible thing to do.
Im not saying I’m all the way there in thinking this but I’m really starting to wonder if everyone got caught with their pants down. The banks heard Elon Musk and probably didn’t do their due diligence in the loan, with the speed of this thing it’s not hard to imagine he is not as in command of the situation as he’d like people to believe. Either way it’s going to make a great business school case study.
Will the SEC arrest him? Ban him from being a Director of a public company?
I keep hearing about him 'getting in big trouble'. But I don't get it.
Don't get me wrong, I'm sure it is upsetting for him to possibly be forced to pay millions in fines and maybe even be kick off one of his projects.
But that isn't a very big downside, and half of it isn't even from the SEC.
I mean, there seems to be a pattern when it comes to the misbehavior of the ultra powerful:
The upside to his action has the potential in the billions, while the potential IF caught is generally going to be a fine worth millions.
He may have snubbed his board badly enough that they make him pay for this incident by removing his control of the project, but that is a separate matter.
I feel whenever someone powerful is going to be punished the media goes crazy over every detail of the noodle that is going to be used as a whip.
> But I think there is a real possibility they did nothing wrong here.
They did blatantly lie about their liquidity problems. They didn't mention it in their fluff blog post. Their CEO smirked on national TV and insisted it was not about liquidity. Turns out it was. That's the problem.
You make it sound like they were funding Musk's purchase of Twitter, when in fact they simply had too much of their money locked in treasury bills (typically considered the safest possible investment) to face off a sudden and massive run on their bank.
> The board negotiated a deal with Elon after putting the poison pill into effect.
There was no "negotiation" with the board. Elon just made an unsolicited offer and said take it or leave it. The board "left it" and yet here we are.
> If Elon had made a deal directly with the stockholders, that would have triggered the poison pill.
What? That's not how poison pills work. Poison pills exist to prevent hostile takeovers. It isn't there to prevent someone from talking to the stockholders. If the stockholders agree to the deal, it is no longer a hostile takeover.
> He surely spoke with and lobbied the stockholders for support, but the deal he agreed to was approved by the board.
Yes. The deal was first rejected by the board. And then the deal was approved by the board. Why do you think that was? What made the board change their minds? I wonder. You might have a point if elon raised his offer from $54.20 to a much higher number. But all reporting indicates he didn't change his offer.
Of course the deal was approved by the board. My point is that the shareholders made them approve the deal.
> Remarkably the SEC did inspect Madoff Investments and did not conclude it was a fraud even though it obviously was.
> Ultimately as a potential investor this would have been easy to spot as at least suspect.
You think that even after the SEC failed to spot the fraud investors with far less power should be able to? I don't quite follow your argument here. A little more clarification would be nice.
> Finally it did result in people losing their retirement funds, for some people absolutely everything.
Taking money that people have received 20 years ago off people will also result in some people losing everything. (I know that they say that the people they are extracting the money from are keeping the original investments but what if some of the money has been spent?)
Didn't realize they were planning to pay that out to investors, thanks for the correction.
The short-sellers also lost money due to Musk's fraud, though admittedly that's a small fraction of volume.
To get an estimate of the damage done, the price went up by ~$40 share, with ~30 million shares traded. Let's assume the average buyer bought at the midpoint, so they lost $20/share. That's still $600 million transferred from people who believed Musk to people who doubted him – 15 times larger than the total fine to Musk + Tesla.
> Yes it’s a glaring example of fraud and dodgy deals/assets, since you seem unable to accept that the obvious fraudsters are in in fact up to no good.
Did I claim that they weren't engaging in fraud, or that the deal wasn't dodgy? My objection was with "money laundering". Even with the loosest possible interpretation, there needs to be some sort of obfuscation involved. The facts seem to point towards something very straightforward (ie. Alemeda Research borrowing money from FTX), which suggests that no obfuscation was attempted. All of this confirms my prior comment:
>It feels like certain terms (eg. "ponzi scheme", "money laundering", "shell companies") get thrown around any time there's any sort of financial malfeasance, without regard to their specific meaning.
Was there malfeasance at Alameda Research/FTX? Hell yes. Was there money laundering? No.
"Funding was indeed secured. I should say I do not have respect for the SEC in that situation. I don’t mean to blame everyone at the SEC, but certainly the San Francisco office. The SEC knew that funding was secured. They pursued an active public investigation, nonetheless. I was forced to concede to the SEC unlawfully."
> But they have that money today. They can spend it on lawyers.
Lawyers know that they cannot be paid with that money. If they lose it will be forfeited. Similarly you can't rob a bank and use the money to pay your lawyer.
> It’s not like anything will happen to the executives.
That's absolutely not true. It's not unreasonable to expect that the SEC might refer people to the DOJ for criminal prosecution and jail time would send a nice signal.
Speculation. What's not speculation however is that the company suffered material harm as a byproduct of malicious prosecution.
If I, as a government employee, open a public investigation into someone whom I know to be innocent and cause that entity harm I have incurred liability. The SEC knew Elon had the funding, they used weasel words to imply he did not. The SEC would have lost in court. _All_ contracts have contingencies, this was no different. Saying that because a contingency existed the funds were "not secure" is horsecrap.
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