U.S. securities regulators on Thursday sought to force Tesla Inc. TSLA -0.67% Chief Executive Elon Musk out of the company he helped get off the ground about 15 years ago, alleging he misled shareholders when he tweeted he had funding for what would have been the largest-ever corporate buyout.
The complaint filed by the Securities and Exchange Commission came after a last-minute decision by Mr. Musk and his lawyers to fight the case rather than settle the charges.
The filing by the SEC in federal court in Manhattan threatens to deal a severe blow to the Palo Alto, Calif., electric car maker. Its brand and Mr. Musk are closely intertwined, and analysts have said the company’s roughly $50 billion market value is driven by Wall Street’s appreciation for Mr. Musk’s vision and skill as an innovator.
Tesla wasn’t named in the suit as a defendant, but the SEC is seeking to bar Mr. Musk, Tesla’s largest shareholder and its top executive, from serving as an officer or director of any U.S. public company. Tesla shares, which have been under intense pressure amid questions about the firm’s financial strength and Mr. Musk’s behavior, tumbled 9.9% to $277 in after-hours trading Thursday on Nasdaq.
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The SEC said that contrary to the statements he made in several Twitter messages on Aug. 7, Mr. Musk “knew that he had never discussed a going-private transaction at $420 per share with any potential funding source.” The agency said the statements and omissions of fact caused disruption to the market for Tesla shares—which rose more than 10% the day of the tweets—and harm to investors.
“It’s an easy case,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “He said in the tweet he had financing, and apparently he didn’t. … It’s about as straightforward as you can get.”
Full story here
I know someone with two of his cars, one~ 5 yrs old and they work very well. He drives a lot, and there were free charging stations all over the place and at hotels etc. Did Musk ‘unlearn’ how to make them?
“it’s a good Tesla car”
Yes but what was the price tag?
Those two may “work” well (although that is quite a small sample size). My friend’s is regularly suffering from annoyances such as breaking door handles, rearview mirror falling-off, etc. Hasn’t broken-down by the side of the road…yet. But plenty of things that should not “fall apart” on a 2-yr old car.
Musk seems to be coming apart at the seams.
He should have sold this company years ago. Success was predicated upon high prices for fossil fuels. The only chance for this type of product to succeed is a major increase in battery power density and low electricity prices. I do not begrudge any manufacturer taking advantage of subsidies which are available to all. If we want to cut subsidies, we should start with agriculture, and not focus on some new tech which was subsidized for a fixed period of time in order to help with the success of the new technology. Musk did not receive anything that others were also not entitled to. Same goes with SpaceX. If they did not get these contracts, it would be other more entrenched cronies.
Looks bad for Musk right now, and the failure of his automobile venture will have a knock-on effect for orbital services. It is in our national interest for that business to succeed. If Tesla goes belly up, what does that mean for the most successful private space company ever? Sell it to the Chinese? I don’t think so. It would need to be a trusted American company with very deep pockets. Amazon? Google? I know that many Americans trust those outfits, but I do not.
Better to take care of the crony who can be most trusted, no matter how eccentric he may be.
Was this tweet made right after toking up on the Joe Rogan Podcast?
I have to say that Musk has done an amazing job of making a dream into a reality. He’s sold hundreds of thousands of cars – something that almost no one thought possible in today’s global marketplace. I have to admire that.
However, the Tesla cars are more of a fad and a fashion statement than the future of all vehicles. I think that Mini might be a reasonable comparable. They started out very strong, and they were able to make several variations, but ultimately the steam is slowly going out of the brand. As they become common they lose their uniqueness and are viewed as ‘just another car’.
When the fashion changes and the fad cools, sales will drop for Tesla. How soon and how far? Those are the questions. Certainly much of Tesla’s appeal is wrapped up with Elon’s image. If he damages his image, he damages the company. As for the fashion, there are going to a lot of options by other makers in the marketplace in the next few years along with a couple of hundred thousand Telsas. I still see more Model S than Model 3’s (And Model X are very rare) but I probably see two or three Model 3’s a week now.
When “anyone can have one” the status of owning a Tesla fades. Additionally, right now, the conversation goes, “Oh, you bought a Tesla! How cool! Isn’t Elon amazing?” If that changes to, “Oh, you bought a Tesla – my cousin has one just like it. It’s a pretty good car but don’t you think Elon’s
an asshoa jerk?” The thrill will wither and sales will drop offLike Apple Macintosh, who was believed by millions of fan to be superior when it was extremely inferior to even the very defective Win95!
The level of autism was on display when during a Apple event, the MacOS 7 file manager was compared to… MS-DOS’s “dir” command.
Are his batteries about to get leapfrogged by the billionaire owner of the LA Times?
https://www.cnbc.com/2018/09/27/cheaper-battery-is-unveiled-as-a-step-to-a-carbon-free-grid.html?__source=sharebar
Not at $100 per kilowatt hour for storage. This storage is still too expensive to put on the nation’s power grids. Also, there is still the pie-in-the-sky dream of cheap renewable energy in this article. All I read in this article is another excuse for the “affordable renewable energy” lie that manufacturers of wind turbines and solar schemes keeps putting out there. I’m interested in the blade lifetime of the growing number of turbines on the desert at Ocotillo, CA. They are being blasted by sharp micro-grit sand that is always in the air in that region.
“Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support, according to data compiled by The Times. The figure underscores a common theme running through his emerging empire: a public-private financing model underpinning long-shot start-ups.” – LA Times
If even the LA Times is bailing on Musk, he doesn’t have a lot of running room left.
Awhile back for some forgotten reason, I signed up for email alerts on TSLA from Seeking Alpha. Do not do that unless you have loads of free time to read the fire hose stream of articles pouring into your inbox. The problem for TSLA fans is that the majority of the analysts covering Tesla/SolarCity are reporting very serious production, supply chain, logistic (delivery/service), quality, competitive, financial and regulatory issues for the company. One analyst has an article stating they are functionally bankrupt. Upcoming 3rd Quarter results will be interesting to read.
“I signed up for email alerts on TSLA from Seeking Alpha. Do not do that unless you have loads of free time to read the fire hose stream of articles pouring into your inbox.”
Funny! Here’s where to sign up: https://seekingalpha.com/symbol/TSLA
Thanks, Roger. I actually had not opened my email when I posted the original comment. Oh, man! Must have been close to a dozen articles from the last 24 hours. (Note: my Yahoo email account where I get the SA stuff sends most of them to the spam folder.) Not a good day for TSLA; some big players, like Citi, recommending “Sell.” As of now, the stock is down over 14% today.
Surely there are electric vehicles in the future and I hate to see an American company fail. I’d wouldn’t like to see my children driving Chinese electric vehicles. At the same time, let free market reign and when better battery tech comes along, and vehicles can be made with fewer moving parts and sensors, and maybe cheaper than gas vehicles, then good for them. I’ll be too old to drive before that happens 😉
So Leon cracks a joke, about and while patently under the influence of Mary Jane.
And a legion of humourless, selfish & greedy money grubbers take him at his word.
They subsequently ‘get’ the joke but meanwhile have lost money.
And its everybody else’s fault but theirs.
Boys & girls, you ever heard the adage: “Don’t gamble if you can’t afford to lose”?
Wake up, get a life, get a sense of humour. Be a ‘good loser’
Apart from slowing the reckless gambling, may also stop your wife putting on those walking boots – think of the money you’ll save on lawyer’s fees and alimony.
Elon Musk isn’t a greedy money grabber? Of course, he did tweet he was taking the company private and buying up stock for $420. Good opportunity for anyone to make $$$ if it were true. This caused TSLA stock to go up by ALOT… only to discover it was a lie. Short sellers lost billions trusting what Elon tweeted. Not allowed to influence the market in such ways. Time for this child to get a spanking. $263 at time of posting.
It’s hard to tell if that was a sarcastic effort at being funny or if you just really meet the standards of both PETA and Newark.
The Leon (errr, Elon) tweet was one month before he smoked pot on Joe Rogan’s podcast. And the tweet was not a joke about Mary Jane. He had another tweet within a week that implied a private buyout was in the works…but it was actually a firm considering an investment, not acting as a broker.
On the podcast in question, Rogan asked if Elon had ever smoked, and Rogan said, “I don’t think so.” He caved like a 7th grader under peer pressure, took what wouldn’t amount to a puff in any dictionary, and shrugged his shoulders like he was too cool for school because that minute toke didn’t affect him in that first millisecond. He’s no pot smoker.
TSLA is down about 15% at the moment, but still above its 52-week high.
Shorts are getting their revenge for his taking private stunt.
The SEC case is strong.
I meant low, of course. Miss the edit function.
Elon Musk sold a massive battery which was installed in South Australia. The govt. at the time headed by Jay Weatherill were Green Whackos. It is alleged to be able to supply electricity to a large number of houses for four hours. I believe the houses were never disconnected from the grid to prove the battery works. It was reported that the owner of the battery earned something like $800m in 48 hours when electricity soared to $14,000mw. It would appear to me something is terribly wrong. I suggest fraud and that an investigation should be held.
The last article by Brian Johnston should read $800 thousand in 48 hours. The battery allegedly cost $300m
I’ve never found a good technical explanation of the Jamestown battery. It’s clearly too small (100MwH) to handle a major power failure. What I THINK it does is buffer the burstiness of wind power, and if that’s the case, it’s a good thing and every grid with substantial wind contribution should probably have one or more of them — at a cost of $90M (AUD?) each.
As for South Australia’s electricity pricing scheme. Some things are too demented to waste time trying to figure out. Best to simply ignore the numbers I think. I’m pretty sure they are meaningless as long as one does not have the misfortune to be in South Australia and paying for electricity.
Shareholders can invest in whatever they want, including the faith of man-made apocalypse by 0.01%, 0.01 °C, 1 millimetre etc. I’m more concerned about the taxpayers’ funds being defrauded.
Don K. I believe the battery is a con and useless. Stop These Things – not a credible group – claim the battery will last 4 minutes. I have it on good authority the battery won’t last 4 seconds. Won’t work. It will not have the capacity/grunt/oomph to supply real energy into the grid. I just have to wonder if Musk is a con man. If only they would test the battery.
This sounds like a tragedy about to happen.
This sounds like a dead company, not a dying company.
An observation to support that concern is it is a fact, to ensure a $10 million loan to Tesla (to protect against the risk of Tesla going bankrupt) as of Thursday this week, costs $2.6 million.
The above means Tesla will need to pay more than credit card interest say 22 percentage to service their debt. Tesla needs loans to purchase parts, pay employees, and so on.
With super high debt costs it sounds like it will be impossible for Tesla to be profitable.
Tesla has 11 billion dollars in upcoming debt to service.
Tesla is a one product, bet the farm type company with astronomical large liabilities if Tesla were to fails.
Tesla series 3 cars look like airplanes and like airplanes are not safe to run\operate\turn on without the original manufacturing company fixing normal bugs – software, connections, sensors, smart modules, and so on.
It is absolutely normal to have costly bugs to fix in the first generation of any product.
The first generation of bugs are fixed by an in house engineering team and the fixes are sent to the field maintenance staff how fix the cars,
The costs to find and fix bugs are absorbed by future increasing sales.
Particularly in this case as the new model was rushed and 20 percent of the staff where laid off to save costs, it is seems very possible that there will be bugs.
If Tesla goes bankrupt all of the original engineering staff and software staff will leave.
Normally, customer issues are fed back to the engineering staff and resolved.
If Tesla goes bankrupt there will be no one who understands how the car was designed and fix the problems.
In the best case the Tesla cars which have zero company engineering support, will fail safe.
Just stop operating which will be a sever issue to customers but no risk to the general public.
Based other manufacturers experience some failures will likely cause damage.
If Tesla cars cause damage due to unresolved bugs, insurance rates will rise and likely you will not be allowed to operate/turn on the complex machine.
A Tesla car that can be turned on is just a pretty box.
https://www.bloomberg.com/news/articles/2018-09-28/tesla-default-insurance-jumps-to-new-high-after-sec-sues-musk
“It is absolutely normal to have costly bugs to fix in the first generation of any product.”
Not when you sell essentially a drone on wheels.
Deliver garbage and fix later (or never) was bad enough for personal computers.
CNBC reported that if Tesla is under SEC investigation, it cannot access the capital markets. They have a huge loan repayment due early next year. They are in a lot of trouble unless Musk can settle this quickly.
What do you mean? An investigation (that could drag on potentially forever) could freeze the capital? That does NOT sound right. Something seems rotten in America (the land of the bureaucrats, kingdom of the never accountable).
https://www.foxbusiness.com/markets/teslas-elon-musk-sec-settle-fraud-charges