TSLA - Tesla Motors

[rb]

What's odd is the WSJ reporting that a settlement was eminent (I assume fine + stepping down)... but then Musk balked.

 

... strange and a half.

Reminds me of a scene in Billions.

[Gregmal]

I honestly don't see how the SEC pleads this out for a slap on the wrist and still keep any pretense about why they should exist.

 

He did it. He did it publicly in front of millions of people. He bragged about doing it. This must be the most open and shut case the SEC ever had. They're gonna plead it out? Why? Because lots of people like Elon Musk?

 

Look at what the bid and ask was for Lee Cooperman and what it got settled for.

 

The SEC is this huge creature that is scary to those on the outside looking in. To those in the business its a joke run by people who ultimately aspire to work for the people they are responsible for policing. It's a massive conflict of interest but one that won't go away until you put some kind of ban in place preventing post SEC employment at SEC regulated firms.

I am in the business and I agree that the SEC can be a joke. They still have the toolbox at their disposal. It ebbs end flows with the Administrations. Some want them to me more vigilant some one them to be more lenient. During GW bust times for example it was a complete joke.

 

Nevertheless, they still have to take a scalp every now and then to justify their existence. You know people there would still like to get paid while they polish their resumes to go into private sector. Furthermore, usually when one commits fraud one tries to be at the very least discrete about it. Leon Cooperman did not commit fraud and live tweeted it.

 

You're right, although Elon IMO isn't the scalp they want. A guy like Barry Honig or Phil Frost, definitely is. Musk now that I think of it was actually brilliant in the sense that he's more or less been a sweetheart of both the Trump and Obama administrations. Tell me, how the f*ck does one do that? He's a Houdini.

[Spekulatius]

What's odd is the WSJ reporting that a settlement was eminent (I assume fine + stepping down)... but then Musk balked.

 

... strange and a half.

 

Agree the case seems open and shut.

 

He may want to get pushed out so he can be the victim, or he needs to walk the stock down now so he gets margin called out at a reasonable price.

 

My best guesses.

 

Margin calls often were often a blessing for CEO‘s when the ship starts to take on water.

[benhacker]

Board out with a statement of support.

 

I think if you don't see some Board resignations (implying the statement isn't 100% endorsed) by tomorrow, this is super bearish news for Tesla.

 

It means that any compromise with SEC either:

1) wasn't possible (aka, keeping Musk as an employee, but not an exec/BoD member)

2) was worse in what it would open up certainly (something they are hiding) than the slim chance they will avoid stronger action (by either the SEC, or Cali DOJ) and protect whatever they don't want.

 

Bullish interpretation... Board truly believe no fraud and confident they can win.

 

---  Or board view Musk as indispensable for companies survival if not on Exec/BoD position... seems an oddly strong statement... but maybe SEC wouldn't have allowed him any position.

 

alternative.... "BoD" is just a majority for this statement, and now the less captured BoD members resign... (my guess - Murdoch at least will step down).

 

Fun one, one for the record books.

[Grant]

The SEC is this huge creature that is scary to those on the outside looking in. To those in the business its a joke run by people who ultimately aspire to work for the people they are responsible for policing.

 

There's only a conflict of interest there if a firm they're responsible for policing is one they'd aspire to work at. I doubt many SEC employees get hired by Tesla.

 

The commission didn't really have a choice. Musk tweeted blatantly obvious securities fraud to 22 million followers. If they did not act swiftly, the integrity of U.S. capital markets would be put at risk.

 

I think many are overestimating the SEC. Musk won't be kicked out by them. They'll settle on something less.

 

They already tried to settle. Musk backed out: https://www.wsj.com/articles/elon-musk-sued-by-the-sec-for-securities-fraud-1538079650

 

The SEC had crafted a settlement with Mr. Musk—approved by the agency’s commissioners—that it was preparing to file Thursday morning when Mr. Musk’s lawyers called to tell the SEC lawyers in San Francisco that they were no longer interested in proceeding with the agreement, according to people familiar with the matter. After the phone call, the SEC rushed to pull together the complaint that it subsequently filed, the people said.

 

benhacker, if the board does intend to remove Musk, what would they say? I believe they'd say exactly what they did: paint a picture of everything being fine while looking for a replacement. Ergo I don't think their statement tells us much.

[Gregmal]

The SEC is this huge creature that is scary to those on the outside looking in. To those in the business its a joke run by people who ultimately aspire to work for the people they are responsible for policing.

 

There's only a conflict of interest there if a firm they're responsible for policing is one they'd aspire to work at. I doubt many SEC employees get hired by Tesla.

 

The commission didn't really have a choice. Musk tweeted blatantly obvious securities fraud to 22 million followers. If they did not act swiftly, the integrity of U.S. capital markets would be put at risk.

 

I think many are overestimating the SEC. Musk won't be kicked out by them. They'll settle on something less.

 

They already tried to settle. Musk backed out: https://www.wsj.com/articles/elon-musk-sued-by-the-sec-for-securities-fraud-1538079650

 

The SEC had crafted a settlement with Mr. Musk—approved by the agency’s commissioners—that it was preparing to file Thursday morning when Mr. Musk’s lawyers called to tell the SEC lawyers in San Francisco that they were no longer interested in proceeding with the agreement, according to people familiar with the matter. After the phone call, the SEC rushed to pull together the complaint that it subsequently filed, the people said.

 

benhacker, if the board does intend to remove Musk, what would they say? I believe they'd say exactly what they did: paint a picture of everything being fine while looking for a replacement. Ergo I don't think their statement tells us much.

 

From outside that's conventional wisdom. But it's not how those at the agency work. They know it's a good ole boys club. They know how interconnected everything is. Elon's got friends, Tesla's got IB's and FA's, then you've also got money managers involved. The SEC is 100% motivated to get their settlements while not disrupting things too much. It's more or less politics.

[Guest cherzeca]

this is a slam dunk F&M case.  in the pre-twitter days, it was more difficult to present compelling evidence that a ceo/chairman issued a false and misleading disclosure. liability here is a given, the only question is what remedy.

 

SEC may want a scalp given how outrageous this false disclosure was.  the more the board supports Elon, the more likely the SEC will seek Elon's scalp.  at some point, the board will want to save the company...and by the way, that point may be about when Elon's margin calls kick in

[oddballstocks]

What's odd is the WSJ reporting that a settlement was eminent (I assume fine + stepping down)... but then Musk balked.

 

... strange and a half.

 

Agree the case seems open and shut.

 

He may want to get pushed out so he can be the victim, or he needs to walk the stock down now so he gets margin called out at a reasonable price.

 

My best guesses.

 

Margin calls often were often a blessing for CEO‘s when the ship starts to take on water.

 

That's my thought here.  How does he get out before it hits zero?

 

If the stock drops and hits the death spiral he could be margined out at $200-230 and totally stopped out at around $100. 

 

I think with the debt, the likely inability to raise this will be eventually BK, the issue is where does it trade then? Maybe $10, $20? That's really high, but still...

 

If that's the case and this settles at $20 and he was cashed out at $200 that's quite the parachute, it's 10x higher than anyone holding long term.

 

And if they don't need to file an 8-k for anything why would they need to file insider disclosures either?  He can just dump his shares and be on his way.

[meiroy]

 

I don't see this politically going through.  He'll survive it and at worse someone buys the company.  I'm going to keep an eye on this and will go long [calls] for the first time if it drops enough, as a trade.

[oddballstocks]

 

I don't see this politically going through.  He'll survive it and at worse someone buys the company.  I'm going to keep an eye on this and will go long [calls] for the first time if it drops enough, as a trade.

 

Can you walk me through the math and assumptions on the long?

[benhacker]

I just wish the puts were cheaper - $8.75 for December 21 $200 Strike puts is sort off pricy. Tesla looks really bad as a long, but will it fall apart as quickly than the bears think it does? I am not an option expert, but betting on Tesla‘s demise looks expensive to me.

 

It is quite expensive.  This is why I argued earlier for a straight short as the best way to express the view.

 

Eric, I'm in the Silicon Forest, I agree it's hard to explain why a company who's products are appearing more and more is struggling.  Luckily, Elon is doing everything he can to help with the conversation...

 

My buddies VIN # is now assigned to him again now....  Curious if this experience is the same for those who actual send in the full check...

 

Note, my buddy no longer has a VIN again (a few days ago)... just for full updating here.

 

Just a continual circus of bad controls here - intentional or not.

[DTEJD1997]

Hey all:

 

I really don't see how this is NOT a "super duper bankruptcy", absent some very well capitalized company buying them out.

 

If a buyout were to occur, I would guess it would be HUNDREDS of points lower than where it is at now.

 

Also, I wonder if TSLA blows apart, if that might not set off a market correction?

[rb]

This is not a company that will go away. Someone will buy them out if the price gets low enough. I can definitely see BMW buying them for say 5 billion. Daimler has been a majour investor before so they're familiar with the company. They may also be interested at the right price. Nobody is gonna pay 50 billion for them though.

[DTEJD1997]

This is not a company that will go away. Someone will buy them out if the price gets low enough. I can definitely see BMW buying them for say 5 billion. Daimler has been a majour investor before so they're familiar with the company. They may also be interested at the right price. Nobody is gonna pay 50 billion for them though.

 

Oh my yes, I very much could see a larger company taking them out for $5bb...but shareholders would be left holding the bag bigly.

 

I just don't see it how they make a go of it on their own.  Too much debt, no clear path to profits, CEO appears to be having problems of various types...product quality problems...on and on...

[rb]

I said 5 billion not 50 billion.

[Voodooking]

After reading all the legal documents and SEC court filing, I agree that he needs to be held responsible for breaking the rules and blurting out a half-baked idea without discussing it with his board, his lawyers, or the NASDAQ. The SEC couldn't sit by and not investigate, it would be a laughing stock because of how blatant this was.

 

However, I think what he did was reckless, not fraudulent. I don’t think he set out to intentionally harm anyone, I think he just stupidly didn’t think things through before acting.

 

I do kind of see his point that he couldn’t discuss it with some investors but not the rest, which is his justification for announcing it.

 

I do think he should have run it past his board etc. and actually come up with a plan of action first.

 

It’s weird because I’d probably guess that Elon Musk is about 2 or 3 times smarter than me, and I’d have known that the whole thing was a stupid, messy idea and not to do it without a lot of consultation and planning first. Surely he should have done too? It's also pretty scary how the CFO etc. had to text him to ask if it was real!

 

I think if I was on the board of a company, and the CEO announced a take-private transaction without discussing it or announcing it to the board, or holding at least one meeting, I'd resign from the board the next day. It's not acceptable behaviour.

[BG2008]

If Tesla fails, could it be the Lehman moment of 2018?  A $50bn company goes to $5bn and $45bn wealth gets wiped out. 

[mwtorock]

After reading all the legal documents and SEC court filing, I agree that he needs to be held responsible for breaking the rules and blurting out a half-baked idea without discussing it with his board, his lawyers, or the NASDAQ. The SEC couldn't sit by and not investigate, it would be a laughing stock because of how blatant this was.

 

However, I think what he did was reckless, not fraudulent. I don’t think he set out to intentionally harm anyone, I think he just stupidly didn’t think things through before acting.

 

I do kind of see his point that he couldn’t discuss it with some investors but not the rest, which is his justification for announcing it.

 

I do think he should have run it past his board etc. and actually come up with a plan of action first.

 

It’s weird because I’d probably guess that Elon Musk is about 2 or 3 times smarter than me, and I’d have known that the whole thing was a stupid, messy idea and not to do it without a lot of consultation and planning first. Surely he should have done too? It's also pretty scary how the CFO etc. had to text him to ask if it was real!

 

I think if I was on the board of a company, and the CEO announced a take-private transaction without discussing it or announcing it to the board, or holding at least one meeting, I'd resign from the board the next day. It's not acceptable behaviour.

 

i remember Charlie Munger said something like Elon Musk is a guy with 150 IQ but thinks he has 300 IQ. That is exactly the type of guys that Warren said is going to be dangerous many years ago because they are crazy.

[tombgrt]

On one hand it is amazing that this stock is down 11% as it was clear before anything from the SEC came out that Tesla and Musk are in trouble. On the other hand it is unbelievable that shareholders don't tank this stock more. How does this news not shatter any confidence you have left?! Which fund in their right mind wants to keep holding on to this POS? And how many claim to follow ESG investing guidelines yet hold TSLA?! Nuts.

[Liberty]

https://www.cnbc.com/2018/09/28/teslas-musk-pulled-plug-on-settlement-with-sec-at-last-minute.html

 

Tesla and the Securities and Exchange Commission were very close to a no-guilt settlement Thursday, reported CNBC's Andrew Ross Sorkin on Friday, citing sources. But, these people say Musk pulled out of the agreement at the last minute.

 

Under the terms of the deal, Musk and Tesla would have had to pay a nominal fine, and he would not have had to admit any guilt. However, the settlement would have barred Musk as chairman for two years and would require Tesla to appoint two new independent directors, reported CNBC's David Faber, citing sources.

 

Musk reportedly refused to sign the deal because he felt that by settling he would not be truthful to himself, and he wouldn't have been able to live with the idea that he agreed to accept a settlement and any blemish associated with that, the sources said.

[Jurgis]

I completely support Elon Musk and Tesla and wish them all the best.

[gfp]

The decision to decline a settlement offer that generous is more concerning than the initial crime.

 

 

https://www.cnbc.com/2018/09/28/teslas-musk-pulled-plug-on-settlement-with-sec-at-last-minute.html

 

Tesla and the Securities and Exchange Commission were very close to a no-guilt settlement Thursday, reported CNBC's Andrew Ross Sorkin on Friday, citing sources. But, these people say Musk pulled out of the agreement at the last minute.

 

Under the terms of the deal, Musk and Tesla would have had to pay a nominal fine, and he would not have had to admit any guilt. However, the settlement would have barred Musk as chairman for two years and would require Tesla to appoint two new independent directors, reported CNBC's David Faber, citing sources.

 

Musk reportedly refused to sign the deal because he felt that by settling he would not be truthful to himself, and he wouldn't have been able to live with the idea that he agreed to accept a settlement and any blemish associated with that, the sources said.

[benhacker]

After reading all the legal documents and SEC court filing, I agree that he needs to be held responsible for breaking the rules and blurting out a half-baked idea without discussing it with his board, his lawyers, or the NASDAQ. The SEC couldn't sit by and not investigate, it would be a laughing stock because of how blatant this was.

 

However, I think what he did was reckless, not fraudulent. I don’t think he set out to intentionally harm anyone, I think he just stupidly didn’t think things through before acting.

 

I do kind of see his point that he couldn’t discuss it with some investors but not the rest, which is his justification for announcing it.

 

I do think he should have run it past his board etc. and actually come up with a plan of action first.

 

It’s weird because I’d probably guess that Elon Musk is about 2 or 3 times smarter than me, and I’d have known that the whole thing was a stupid, messy idea and not to do it without a lot of consultation and planning first. Surely he should have done too? It's also pretty scary how the CFO etc. had to text him to ask if it was real!

 

I think if I was on the board of a company, and the CEO announced a take-private transaction without discussing it or announcing it to the board, or holding at least one meeting, I'd resign from the board the next day. It's not acceptable behaviour.

 

i remember Charlie Munger said something like Elon Musk is a guy with 150 IQ but thinks he has 300 IQ. That is exactly the type of guys that Warren said is going to be dangerous many years ago because they are crazy.

 

Voodoo, I think this is a very charitable interpretation of his actions.  You yourself upthread were making investment decisions thinking what he did this validly.  I'm sure some shorts did too.

 

How long before Musk called it off?  What was he thinking during that time?  Clearly he wanted to hurt some, ended up hurting others (ironically, he probably hurt his followers most, and helped the shorts the most...)

 

Grant,

 

"benhacker, if the board does intend to remove Musk, what would they say? I believe they'd say exactly what they did: paint a picture of everything being fine while looking for a replacement. Ergo I don't think their statement tells us much."

 

I think the fact they talk shit in their statement about how they are the most successful car company in the a century is probably a dumb ass way to imply "ends justify the means"... which is a dumbass statement to make in the circumstances.  A statement of support... sure.  But that release was written by Elon or someone just as tone def.

 

Liberty,

 

If a no-guilt settlement was on the table, it seems amazing to me it was no accepted.  Huh...

 

 

[CorpRaider]

The decision to decline a settlement offer that generous is more concerning than the initial crime.

 

 

https://www.cnbc.com/2018/09/28/teslas-musk-pulled-plug-on-settlement-with-sec-at-last-minute.html

 

Tesla and the Securities and Exchange Commission were very close to a no-guilt settlement Thursday, reported CNBC's Andrew Ross Sorkin on Friday, citing sources. But, these people say Musk pulled out of the agreement at the last minute.

 

Under the terms of the deal, Musk and Tesla would have had to pay a nominal fine, and he would not have had to admit any guilt. However, the settlement would have barred Musk as chairman for two years and would require Tesla to appoint two new independent directors, reported CNBC's David Faber, citing sources.

 

Musk reportedly refused to sign the deal because he felt that by settling he would not be truthful to himself, and he wouldn't have been able to live with the idea that he agreed to accept a settlement and any blemish associated with that, the sources said.

 

Yeah, crazy.  Also, may reveal a fair amount about how the SEC views the strength of its case. 

[DTEJD1997]

Hey all:

 

I've seen some interviews of Mr. Musk...he appears somewhat autistic to me.

 

I am also SHOCKED that TSLA is only down 35 points this AM.  I would think it would be down 100+ points.

 

Elon declined a mild slap on the wrist for what happened?  Fine, let the hammer come down on him.  He is BEGGING to be made an example of.

 

This is NOT going to end well.