Is The SEC Screwing You?

This article isn’t just about Tesla. In fact, it’s just approximately half about Tesla.

The Tesla story seems rather absurd, but also rather straightforward. Elon Musk tweeted that he was considering taking Tesla private and then explored the possibility. That was more transparent than CEOs of public companies tend to be, and many shareholders appreciated that. In the end, after various discussions and learning that it would be much harder to let retail investors keep shares in TSLA if it went private, Elon decided Tesla wouldn’t go private.

The SEC decided to pursue massive penalties against Elon Musk and Tesla in the name of “protecting” shareholders. Their “protection” of shareholders tanked the stock. A penalty for making a major announcement without notice in the middle of a trading day warrants some penalty, but not what the SEC was seeking (and partly got), and the idea that Elon should be penalized for being as transparent with shareholders as he was is ridiculous, in my humble opinion.

Former SEC senior counsel Thomas Gorman said what many have acknowledged — the tweets had some downsides from a business perspective, but they were certainly not fraudulent. “There’s a significant difference between bringing a law enforcement action, charging someone with fraud, and saying, ‘This is not really a great way to do your business,’” he noted. The Business Insider coverage of his statements on this matter added that there is no legal problem with the tweets Elon sent out on the topics, counter to what many in the financial press have claimed and what the SEC was suing about. “Gorman said the Saudi fund’s reported interest in a take-private deal was enough to make Musk’s statements legal, if ill-advised. And the SEC’s current allegations that Musk hadn’t ironed out the details don’t change that, Gorman said.”

That has all seemed clear and logical for weeks. The hyperventilation about the legality of the tweets was always much ado about nothing, as far as I could tell. (And more recent coverage of Tesla doesn’t make me any more confident the financial press knows what it’s talking about.) I’d say the only big question regarding the SEC lawsuit is what its aims were. Were they to grandstand and use this as an opportunity to scare other CEOs/boards? Were they honest concerns about the tweets? Or is the SEC in the pocket of Big Oil and Big Auto (or have direct interest in such industries) and thus trying to hurt Tesla? Gorman said, “I’m not questioning their motive. I just disagree with their judgment here,” but let’s move on to some other SEC topics and see if there’s any kind of odd pattern.

A number of commenters dropped notes into our first article about the SEC suing Tesla. Steve Hanley cleverly highlighted one of them in his article today about two emails from Elon Musk to staff:

“For you conspiracy theorists out there, it may be interesting to know the same SEC that leapt into action over an Elon tweet also concluded a 2 year investigation into ExxonMobil, during which it reviewed more than 4 million documents. The probe centered on whether the company was truthful with its shareholders with regard to the risks to its business posed by climate change. In the end, the SEC decide to close the investigation without taking any action according to a report by the Associated Press.

“That announcement came on the same day the Trump maladministration announced it was rolling back the fuel economy standards for cars and light trucks put in place under president Obama. Coincidence? We leave that to you to decide.”

Wait, what? The SEC, with Trump-appointed SEC chairman Jay Clayton in charge, concluded a two-year investigation into ExxonMobil’s obviously misleading history with no action? At around the same time it slammed Elon Musk with an inane lawsuit? The SEC didn’t find that ExxonMobil has been deceiving shareholders about the risks of climate change to its business even though there’s proof of that in the public record and it’s as obvious as it is that water is wet?

Source: Is The SEC Screwing You? | CleanTechnica



