Elon Musk steps down from Tesla over Tweet, fined 20 million dollars

From NYT:

Elon Musk, Tesla’s chief executive, under pressure from his lawyers and investors, reached a deal with the Securities and Exchange Commission on Saturday to resolve a securities fraud case. The settlement will force Mr. Musk to step aside as chairman for three years and pay a $20 million fine.

The S.E.C. announced the deal two days after it sued Mr. Musk in federal court for fraud and misleading investors over his post on Twitter last month that he had “funding secured” for a buyout of the electric-car company at $420 a share.

Full story here:

https://www.nytimes.com/2018/09/29/business/tesla-musk-sec-settlement.html

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Javert Chip
September 29, 2018 6:07 pm

Musk is a visionary guy in a lot of respects; actually running a metal-bending car factory isn’t one of them.

No argument what he did was wrong, question is why such relatively light punishment (send Musk to jail and his Tesla cowpie craters). Also, why no real oversight from the board? If you weren’t a certified fool before you joined Tesla’s board, you sure are now.

tsk tsk
Reply to  Javert Chip
September 29, 2018 7:18 pm

All boards are jokes. They’re just a rubber stamp of the Chairman/CEO. And please explain why companies also need presidents when they have a CEO?

The only hope is an activist investor who can acquire enough to scare the crap out of the board to make a change. Institutional investors (read your 401k holdings that they get to vote) will support whatever the board does because they want to retain “access.”

Steven Fraser
Reply to  tsk tsk
September 29, 2018 7:58 pm

The requirements for specific officers and their relative functions are defined in the incorporation laws of the state of incorporation. For a ‘C’ Corp, it can be low, as in 2: A president and secretary.

In ordinary parlance, a President is responsible for (presides over) the day-to-day operations of a company, while the CEO can have a wider influence on corporate governance, including mergers & acquisitions, capital allocation to non-operations functions, (i.e., investments) and whatever else the Board would designate. Very often, the President is the CEO as well, but they are often separate positions, and if they are, the reporting relationship of the President and the CEO is defined by by the board, in the absence of statutory requirements by the state.

Boards are elected by the stockholders, and their influence can be profound, or trivial, depending on the representation of the stockholders there. Depending on state law, the board is the elected representation of the stockholders, has a fiduciary duty to them, and are liable if there is malfeasance.

philincalifornia
Reply to  Steven Fraser
September 29, 2018 8:13 pm

Is he (and/or the Board) going to have a class action suit coming his/their way? He’s a big enough target and whether it was fraud or irresponsible or incompetent behavior, they would all seem actionable.

tsk tsk
Reply to  Steven Fraser
September 29, 2018 10:56 pm

Now do the part where you you tell me institutional investors aren’t stockholders and where board members ever really face any consequences. And in most cases board members are approved by shareholders and don’t really face an actual election between competing members. Even in the case of Enron there was no prosecution of board members and they settled shareholder lawsuits for 10% of what they made on the stock.

Last year, 10 directors agreed to pay a total $13 million out of their own pockets to settle the lawsuit. Each director’s contribution was based on 10 percent of the profit he or she realized from selling Enron stock.

Personal payments by directors are extremely rare. The only other recent settlement of this size and type involved the WorldCom directors. William Lerach, the class-action attorney who represented investors, said the plaintiffs were trying to send a message to other boards.

PERRY
Reply to  tsk tsk
September 30, 2018 2:48 am

In general, the chief executive officer (CEO) is considered the highest ranking officer in a company and the president is second in charge. However, in corporate governance and structure, many permutations can take place, so the roles of both CEO and president may be different, depending on the company.

Javert Chip
Reply to  tsk tsk
September 30, 2018 6:48 am

Tsk Tsk

This looks and smells like analysis provided by a snowflake: AKA foolish, judgmental, reactionary, uneducated & inexperienced, but he “learned” everything he knows from reading 10 minutes on the internet.

Snowflakes are easily outraged by things that don’t go their way; this usually initiates a flaming attack (lots of strong words & accusations with zero supporting evidence). Next we get to the absolutist & intolerant un/misinformed “opinion” expressed in a condescending manner (eg “all boards are jokes”).

A tiny, first step to help Tsk Tsk move out of the totally adolescent understanding of corporations: CEOs are usually outward (public) & more strategically focused; presidents are (usually but not always) more internally and tactically focused. Articles of incorporation, and sometimes, state law, define/require these roles.

Of course I’m just a humble retired CFO, but I’m definitely learning from snowflakes.

tsk tsk
Reply to  Javert Chip
September 30, 2018 8:19 am

humble retired CFO

Oh, we get an appeal to authority and false humility.

Next we get to the absolutist & intolerant un/misinformed “opinion” expressed in a condescending manner (eg “all boards are jokes”).

You can, of course, supply ample evidence to the contrary.

Remind me again who’s melting.

Javert Chip
Reply to  tsk tsk
September 30, 2018 5:25 pm

Tsk Tsk

You asked for evidence…

Your own comment provided the evidence for absolutist & intolerant un/misinformed “opinion” expressed in a condescending manner (eg “all boards are jokes”).

Haven’t a clue what you meant by “Remind me again who’s melting”.

RPT
Reply to  tsk tsk
October 1, 2018 6:32 pm

The way you call it Chairman/CEO is the core of the joke you correctly point out.

This being one person is what makes it a joke; the company is hijacked by the CEO, and the owners, who should be presented by the Chairman, has no rights at all.

One result of this is the fantasy salaries paid to the dual function boss on the top in US, often pure and simply a theft from the owners, which are the shareholders.

Ti believe that owners and an employed president has the same target at all times is a fantasy, the big exception of course being when the president is the owner.

In this case Musk owns about 25%, with the kind og ego this guy have, are there anybody who believes all his actions are for the best of ALL the owners?

Kenji
Reply to  Javert Chip
September 29, 2018 10:39 pm

“Visionary”? It’s “visionary” to build a decently-styled electric automobile (better looking than a Nissan Leaf) to the 1%? Please!? There’s nothing “visionary” about that. GM, BMW, VW, and virtually every other auto maker was already developing their own e-cars. And now the tiny market has shrunken even further, with even more competition for the few eco-virtue signaling buyers. There are only so many “true believers” who want to purchase these novelty cars. The electric car will not survive without government intervention to mandate stringent CAFE standards … or in the case of CA … simply mandate that every auto on the road be “emission-free”? More like emission transference to where the poor people live.

Musk is no “visionary”. That’s just what his PR flaks tells you he is. PS … how’s Solar City doing?

Reply to  Kenji
September 30, 2018 2:11 am

that’s the same PS I attach to any discussions about Musk or Tesla with fanbois.

MikeEE
Reply to  Kenji
September 30, 2018 6:26 am

I have to disagree…

When he built Tesla originally, he built high performance sports cars that were unique and attractive to wealthy buyers. He was a huge success at doing that.

Also, he has been/is transforming the space launch industry. That alone makes him a visionary.

The trouble is that he didn’t stop there. He took Tesla beyond where it should have gone into mass production, he merged with Solar City, he’s pushing the mega battery factories, …the hyperloop…

So it’s a mixed bag really, with more bad misses then hits. But I still have to respect what he’s done for space launch and the early Teslas.

What he really needed was someone with veto power that could stop him from going off the rails.

Javert Chip
Reply to  Kenji
September 30, 2018 6:56 am

Well Kenji, you da man!

How many billion-dollar organizations have you envisioned, let alone actually created?

If all those other car companies have been out there banging out electronic cars, how did Musk capture the imagination of the market? Do you thing a Prius sends tingles up anybody’s leg? BTW what’s wrong for building cars for the 1%? Enzo Ferrari made a good living (a damn good car) doing it.

Tesla/Solar City isn’t my cup of tea, but I love the hell out of SpaceX.

Ya win some, you lose some. That’s what happens to visionaries.

tsk tsk
Reply to  Javert Chip
September 30, 2018 8:27 am

More appeal to emotion. That’s your opinion, which is fine. But note how quickly you dismissed Kenji’s opinion…

If all those other car companies have been out there banging out electronic cars, how did Musk capture the imagination of the market?

As a CFO, would you call that, perhaps, a CSO? In your humble opinion, of course.

but I love the hell out of SpaceX.

Based on the margins (rumored in the single digits) or the rockets?

Javert Chip
Reply to  tsk tsk
September 30, 2018 5:39 pm

Tsk Tsk

Yup; dismissed Kenji’s opinion with an example of how Musk wins the EV marketing (remains to be seen about financials) race with Tesla (like Enzo did with his Ferrari).

Also dismissed it with my statement of admiration of his visionary rocket concept (he beat NASA to it).

It called “expressing opinions & providing relevant examples”.

Charitably, you’re a little slow; typing the same comments to you twice is a courtesy, which is about to expire.

Joe Crawford
Reply to  Kenji
September 30, 2018 7:40 am

Rather that “visionary” I’d say “talented,” especially at knowing how to milk government subsidies. I seriously doubt he would be in business without them.

Don K
Reply to  Javert Chip
September 30, 2018 5:23 am

“why such relatively light punishment[?]”

Probably because there’s no real evidence that Musk was trying primarily to manipulate the stock price. He did not, for example, pump up the stock price with specious announcements then dump his holdings — pump and dump. He’s (likely) guilty of poor judgement, not malice. So the punishment is just a warning to Musk and others to be a lot more careful about what they post on social media.

Presumably it has been made clear to him that if he ever does something like this again, the SEC (civil) and DOJ (criminal) will unload on him with both barrels.

kent beuchert
Reply to  Don K
September 30, 2018 5:40 am

Boy are you mistaken. Musk actually provided all of the evidence anyone would need for a conviction when he promised to destroy the shorts, who were the obvious targets of his Tweet. The motive was, of course, to inflate his company’s stock price (thus the $420 promise, based on nothing) THEREBY destroying the shorts , who were the only folks actually pointing out Musk’s many fabrications and failed promises.

tsk tsk
Reply to  kent beuchert
September 30, 2018 8:28 am

But shorts aren’t investors, or so I’m told.

Paul Jackson
Reply to  kent beuchert
September 30, 2018 4:03 pm

I honestly thought it was a bad marijuana joke.

Latitude
Reply to  Javert Chip
September 30, 2018 6:14 am

$20 million of who’s money?….our money….paid to who?

Don K
Reply to  Latitude
September 30, 2018 3:01 pm

“$20 million of who’s money?” Musk’s — presumably from his profits from ZIP2 (sold to Compaq in 1999 )and PayPal (sold to eBay in 2002)

“paid to who?” Ostensivly to investors short sellers/owners of calls/sellers of puts who were financially damaged by Musk’s actions. It’ll be interesting to see if anyone was actually financially damaged by Musk’s tweets. Seems to me that most folks figured out pretty quickly that privatization wasn’t a slam dunk and held on to their short positions. I don’t think the SEC is going to reimburse them for extreme mental cruelty if they didn’t actually lose money and it seems likely to me that their “investment” will work out in the long run.

huls
Reply to  Javert Chip
October 1, 2018 7:44 am

What is so visionary about his Tesla stuff? He takes an 150 years old bad idea, electric cars without cables aka trolley busses, and does nothing to improve it. He does not even touch the biggest problem of this bad idea which is the impossible infrastructure needed to transport the needed electricity. That infrastructure is impossible to build for an economically feasible price, if at all. He doesn’t touch on the problem that he creates namely the old infrastructure for liquid energy carriers that will need to be dismantled. He blatantly copies the car’s exterior design from lotus and aston martin (or creates hideous ones himself)
Oh and he has never ever earned one penny with this endeavour.

Remind me again where is that vision apart from a blatant sham for which a lot opfpeople have fallen.

Joel O'Bryan
September 29, 2018 6:09 pm

Short sellers gonna get rich at Tesla shareholders expense.
Tesla has a $230 million convertible bond payment due this November, and a $920 million convertible note next March if the stock doesn’t reach $359.87. And the bond market for commerical paper is basically closed to Tesla at any reasonable interest rate.

If Tesla is going to run out of cash to pay suppliers, it will be next March.

tsk tsk
Reply to  Joel O'Bryan
September 29, 2018 7:21 pm

No prob. Just do another equity raise. There’s infinite money to go along with infinite stupidity.

The reason this was so problematic is that shareholders got rich at the shorts’ expense, but only because Musk committed fraud. He’s getting off lightly.

Roger Knights
Reply to  Joel O'Bryan
September 30, 2018 6:13 pm

“Short sellers gonna get rich at Tesla shareholders expense.”

Not tomorrow—the stock will likely rise at least 5% ($13).

Editor
September 29, 2018 6:16 pm

Looks like a big win for Elon Musk – he remains CEO. To me it’s an abdication of duty by the SEC and a big loss for US taxpayers (because Elon Musk isn’t exactly likely to stop trying to get the public’s money). TSLA shareholders are less hit for now, because their “piggy banks” won’t be emptied while the public unwillingly support EM. But I’m not convinced that TSLA shareholders will ever see a respectable return. JMHO, & DYOR!!!

commieBob
Reply to  Mike Jonas
September 29, 2018 7:07 pm

The purpose of the SEC is to protect investors. That’s necessary so people will be willing to invest and keep the economy growing.

The trick is to punish Musk without harming the shareholders. My WAG is that, without Musk around, Tesla shares would crash.

tsk tsk
Reply to  commieBob
September 29, 2018 7:23 pm

So they protect one class of investors (shareholders) and let him pretty much get away with screwing another class (shorts) by committing fraud. Seems like picking winners and losers, which should not be the responsibility of the government.

Walter Sobchak
Reply to  tsk tsk
September 29, 2018 8:07 pm

Shorts are not investors in the company. They have sold their shares, ones they borrowed and never owned in the first place.

kent beuchert
Reply to  Walter Sobchak
September 30, 2018 5:51 am

Shorts provide safety for investors by providing information about a company that ther company would attempt to hide. Tesla is the least transparent
company on the planet. Investors can’t even determine how many products they sell or what the profit margins really are (Tesla calculates “profit margins” unlike any other automaker). Investing in Tesla is a crapshoot. Tesla loudly publicizes only the good news. It is the ultimate corrupt corporate entity – created and populated by Musk’s relatives and lapdogs. Musk’ s promised goal of providing an affordable mass market electric vehicle is no closer after 12 years of trying – the cheapest car he sells these days is the $50,000 Model 3 Long range version.

tsk tsk
Reply to  Walter Sobchak
September 30, 2018 8:17 am

They are investors. I never claimed that they were investors in the company. Now tell me again why only those long in the stock deserve protection.

Steven Fraser
Reply to  tsk tsk
September 29, 2018 8:16 pm

Unless the short contract is ‘out of the box’, the short seller is not an owner of the stock, not an investor in equity of the company, and has quite different legal rights.

tsk tsk
Reply to  Steven Fraser
September 29, 2018 10:58 pm

They don’t have to be owners of the stock. They are market participants just like the actual shareholders are. Explain why only those long in the stock are entitled to protection from fraud.

Greg
Reply to  Steven Fraser
September 30, 2018 1:53 am

Shorts are predatory parasites who do not even own the stock.

MarkW
Reply to  Steven Fraser
September 30, 2018 8:20 am

I know a lot of people who have the same opinion of anyone who invests in stocks.

Blackcap
Reply to  Mike Jonas
September 29, 2018 9:43 pm

I am with you on your response. Have gone Short TSLA myself 2 weeks ago and just going to hold out till the bitter end. Not going to end well for TSLA.

Tom in Florida
Reply to  Blackcap
September 30, 2018 6:16 am

Perhaps you should stick to the plan you made when you shorted and take your profit at that point.
Remember: pigs get fat, hogs get slaughtered.

Tom in Florida
September 29, 2018 6:43 pm

Go check the company income statements and see the net operating income:
2013 $61 million loss
2014 $187 million loss
2015 $717 million loss
2016 $667 million loss
2017 $1632 million loss (that’s $1 billion, 632 million)
1st qtr 2018 $597 million loss
2nd qtr 2018 $621 million loss

Kenji
Reply to  Tom in Florida
September 29, 2018 7:47 pm

Isn’t “saving our environment” … priceless?

Think of the children …

TonyL
September 29, 2018 6:56 pm

Note to those who would short TSLA:
“The market can stay irrational longer than you can stay solvent”

Although, somehow I feel a disturbance in the FORCE, like a Tipping Point is approaching.

Javert Chip
Reply to  TonyL
September 29, 2018 7:09 pm

TonyL

Had you shorted at $387 when Musk announced his plan to sell at $420, you’d be ahead (ignoring short brokerage costs) $121 based on today’s per share price of $266.

“Things that can’t go on forever won’t”

Roger Knights
Reply to  Javert Chip
September 30, 2018 6:22 pm

I prefer the original version:

Stein’s Law—named for the late economist Herbert Stein, who was chair of Richard Nixon’s Council of Economic Advisers—goes something like this: “If something cannot go on forever, it will stop.”

Editor
Reply to  TonyL
September 29, 2018 7:21 pm

Another note to those who would short TSLA… There are probably a lot of greenie politicians out there who consider it “too big to fail”, and would bail it out with public money if need be.

tsk tsk
Reply to  Walter Dnes
September 29, 2018 7:25 pm

Yup. The Democratic People’s Republic of Democracy of California is sure to backstop. After all they can’t let the NUMI plant close AGAIN.

Roger Knights
Reply to  tsk tsk
September 30, 2018 6:18 pm

A few days ago I read that California had announced it would be increasing its ZEV credits for pure BEVs.

Blackcap
Reply to  Walter Dnes
September 29, 2018 9:44 pm

Even then though if the greenies keep propping it up it is going to dilute the crap out of the existing share holders and the SP is going to keep going down. I am short for the long haul and not losing any sleep over it.

Pop Piasa
September 29, 2018 6:56 pm

The Newsmax headline on the right side of the page says Tesla, Musk Settle Gov’t Suit for $40M; Musk to Stay CEO
Who’s got the story wrong?

Javert Chip
Reply to  Pop Piasa
September 29, 2018 7:11 pm

Musk is simply no longer Chairman, but is still CEO.

Yea, I know: go figure.

Pop Piasa
Reply to  Javert Chip
September 29, 2018 7:48 pm

Guess it just shows how two headlines on the same story can leave different impressions on the same reader. So which its it $20 mil, or $40 mil?

Pop Piasa
Reply to  Pop Piasa
September 29, 2018 8:03 pm

(Maybe I should apply for employment at The Grauniad)

yarpos
Reply to  Pop Piasa
September 29, 2018 8:25 pm

Musk pays 20mill and Tesla also pays 20mill for not keeping him on the leash.

Pop Piasa
Reply to  Pop Piasa
September 29, 2018 7:19 pm

Question #2- Where does this fine go after it enters the maze of bureaucracy?

tsk tsk
Reply to  Pop Piasa
September 29, 2018 7:28 pm

Hillary.

Kenji
Reply to  Pop Piasa
September 29, 2018 7:49 pm

Funding the RESIST embeds in every agency and bureau. With the lions share going to the EPA

Windsong
Reply to  Pop Piasa
September 29, 2018 8:16 pm

Harmed investors, per the SEC press release.

Windsong
Reply to  Pop Piasa
September 29, 2018 8:19 pm

SEC says that it is $20 million from Tesla, and $20 million from Elon Musk personally.

Javert Chip
September 29, 2018 7:03 pm

As an old retired CFO, I see stuff like Uber and Tesla and just scratch my bald head. There is a fundamental difference between gambling and investing. Both certainly have risks, but thinking you’re able to sift thru tech hype to find the next Amazon or Google is simply playing without a net.

But then I had (note past tense…) a wife that got mad at me because I invested in Berkshire Hathaway instead of the latest hot tech stuff (in her opinion, it doubled every month).

I still have my my Berkshire Hathaway (and Visa) investments..

tsk tsk
Reply to  Javert Chip
September 29, 2018 7:27 pm

Buffet is an old school crony. He does it quietly unlike the new breed of unicorns.

Javert Chip
Reply to  tsk tsk
September 30, 2018 5:43 pm

Care to explain and offer some evidence (not just noxious opinion)?

Hal
Reply to  Javert Chip
October 1, 2018 2:23 am

Funding pipeline protesters so his oil trains keep making crazy profits.

Javert Chip
Reply to  Hal
October 1, 2018 4:27 pm

Got a reference or just an accusation?

I’m not saying Buffet’s pure as the driven snow, but I want more than “Tsk Tsk” & “Hal” say so – where’s the link I asked for?

Flight Level
September 29, 2018 7:30 pm

Not a good sign when the captain leaves the ship without a fight.

Reminds me of an old joke. The crew aborts the takeoff run. Back to the gate.
New departure 3 hours later. A passenger questions the flight attendant.
“The captain noticed a fire alarm on one engine and consecutively aborted.”
“And it took that long to fix?”
“Well, you must realize, it takes time to find a new captain.”

Pop Piasa
September 29, 2018 7:38 pm

As Javert Chip mentioned above he is still CEO. All he needs is a two year puppet for chairman. “Go figure” is definitely what comes to mind.

michael hart
Reply to  Pop Piasa
September 29, 2018 7:54 pm

Yes. He appears to have got away with it. It seems a bit like Putin having a subordinate Prime Minister in charge of Russia a few years ago while they changed the constitution to allow Putin to stand as President again.

Steven Fraser
Reply to  Pop Piasa
September 29, 2018 8:28 pm

The role and scope of the Chairman of the Board is subject to state incorporation law and the bylaws of the corporation. The Chairman is elected by the board, convenes/moderates its meetings. The President and CEO, as corporate officers (whether 1 person or 2) work for the Board.

IMO, this action by the SEC is a formal warning to Musk, the Board and short sellers not to play around with the company, and certainly not to break SEC regs on ownership communications.

For what it is worth….

tsk tsk
Reply to  Steven Fraser
September 29, 2018 11:00 pm

What exactly did the shorts do wrong here? It was Musk claiming financing he didn’t have.

Jeremy
September 29, 2018 8:17 pm

What a joke. Musk is a fraudulent criminal that smokes pot and makes Bernie Madhoff look like Goody Two Shoes!

The US markets, banking and financial industry is entirely corrupt. Too Big To Fail applies again. Laws do not apply to these entitled pigs at the trough.

Pop Piasa
September 29, 2018 8:19 pm

Musk sort of reminds me of Preston Tucker. Of course, he couldn’t put a sedan into solar orbit, but there are similarities in behavior.

markl
Reply to  Pop Piasa
September 29, 2018 8:55 pm

+1 Tesla cars can only hope to last as long as a Tucker though.

knr
Reply to  Pop Piasa
September 30, 2018 2:26 am

actually neither did Musk , it missed its intended orbit

Tom Billings
September 29, 2018 9:08 pm

All to the good as far as I’m concerned. Now Musk will have more time for SpaceX and getting BFR off the ground. I always thought stretching himself over 4 different companies was stretching it too thin, and now that is lessened. If we could just get him to drop Solar City, and focus on spaceflight, I’d be quite happy.

beng135
Reply to  Tom Billings
September 30, 2018 6:41 am

Musk not focusing on SpaceX might have been a good thing for SpaceX…..

Gary Ashe
September 30, 2018 12:34 am

Spiteful little b@stard, he hated shorters, so he deliberately out of spite lied to cost them 10s of millions, they will sue now and win,

Theres another 200 million investors will lose.

MrGrimNasty
September 30, 2018 1:23 am

Kapow! And with one bound, Musk was free!

(No, I’m not old enough to remember Dick Barton, my dad told me, honest [as Musk].)

knr
September 30, 2018 2:25 am

Its being set up for a ‘if only I had been in charge the company would never have failed ‘ trick , in one way a smart move has he is likely to walk away with a ton of money , no matter how much the investors lose, and keep his ‘fan club’ for who he can do no wrong .

In reality is was always a case of when not if Tesla would get overtaken by those who been making cars on a large scale for many years .

Don K
Reply to  knr
September 30, 2018 5:35 am

Indeed, Tesla’s assets seem to consist of a single auto factory, a brand name, designs for some expensive electric sports cars, half a battery factory, a bunch of aging solar arrays, and presumably half ownership of a bunch of patents on Lithium Ion battery production and power management technology. Non-trivial, but probably not worth the $10B(?) in debt the company is carrying much less the improbable market valuation of the stock.

Javier
September 30, 2018 5:34 am

Must have been the most expensive tweet in history.

Editor
Reply to  Javier
September 30, 2018 11:15 am

Most expensive tweet in history? I would think so, and by a large margin. But I suspect that it will get a lot more expensive as the class actions come in. The investors most hurt by Elon Musk’s tweet are those who bought TSLA shares just after the tweet. I would think that their class action(s) will cost TSLA a whole heap more than $40m. Will TSLA be able to get any of that back from Elon Musk? I doubt it. IMHO this is not a good time to hold TSLA shares. I find it very difficult to believe that continuing to hold them will turn out to be a good strategy. To my mind, the best strategy now is to get out fast and hope to get some fraction of the losses back through class action.

Roger Knights
Reply to  Mike Jonas
September 30, 2018 6:30 pm

I’ve read comments on Tesla boards from persons who said they bought after Musk’s tweet and lost money, but they won’t sue because they don’t want to hurt the company. Since holding TSLA at this point is unreasonable, they aren’t in it for the money in the first place, but to express enthusiasm for what Tesla is attempting.

kent beuchert
September 30, 2018 5:55 am

And they sent Martha Stwewart to prison and banned her fom running her company because she bought some shares of a company after being informed by her broker that something good was about to happen. Where, oh where , is the justice? Musk has skirted (or broken) the law for years and is being sued by a boatload of folks and govt regulators for a variety of criminal acts.

Coach Springer
Reply to  kent beuchert
September 30, 2018 8:29 am

Amen. But he is a creative subsidy farmer.

Javert Chip
Reply to  kent beuchert
September 30, 2018 5:54 pm

Clarification #1: Martha Stewart was sent to prison for lying to Federal authorities (as was Scooter Libby, and as will be Gen Michael Flynn)

Clarification #2: only DOJ goes after you for criminal stuff; everything else is civil.

Bruce Cobb
September 30, 2018 7:27 am

Wow, that rap on the knuckles with a wet noodle must’ve really stung.

MarkW
September 30, 2018 8:08 am

Will there still be a Tesla in 3 years?

MarkW
Reply to  MarkW
September 30, 2018 8:18 am

My bad, when I first read the article I thought it was saying that Musk was to have no connection with Tesla. From reading the posts I see that he’s just losing one of his hats.

William Astley
September 30, 2018 9:05 am

It not just Musk. This is not going to end well. Try are piles and piles of problems, in addition to a company that is going bankrupt.

Tesla is a textbook case of the legal/practical liability risks of mass production errors and the expected consequences of a lack of servicing (basically no service centers).

The Tesla Model S is a Ferrari like vehicle with Ferrari support and servicing problems.

Early adopters who (William: of the Tesla Model S) could spend six figures on a car such as the Model S might’ve given Tesla a bit of extra leeway. (William: when the Model S is out of service on multiple occasions)

Maybe they figure it’s a small price to pay for such a technologically advanced car.

Maybe it’s a sacrifice they’re willing to make to avoid using fossil fuels and get free access to the carpool lane.

‘Servicing and support’ includes getting parts to repair the vehicle if it has been in a collision. There are waits of two to three weeks to get parts that are only available from Tesla, for the model S.

People who purchase the Tesla’s Model 3 expect Honda like reliability and servicing, they need a car that runs, they care about downtime, number of fixes, and cost to fix.

https://insideevs.com/edmunds-says-long-term-tesla-model-3-has-tons-of-issues/

Edmunds released its April update related to its long-term Tesla Model 3 and it’s far from positive.

As many of you are probably aware, Edmunds has a Tesla Model 3 for the long haul. Essentially, the publication lives with the car over an extended period of time and provides valuable information for prospective buyers.

….We’re talking about intermittment screen and backup camera function, navigation bugs, failure to recognize keycard, audio system independently turning on and off and up to full volume, vanity mirrors falling off, and inability to shift the car into drive or reverse.

The crazy part is that this is just a small list of problems Edmunds has encountered. They’ve been driving the car less than four months and all of this happened in the last four weeks, resulting in two service visits, another visit scheduled, and a grand total of zero days out of service.

Edmunds even went so far as to say that they’ve started a shared Google Doc to keep track of the myriad of problems, warning messages, resets, and overall failures. The article says:

Forget that this is a “cutting-edge” EV with a cult following. That’s irrelevant if Tesla wants to be anything more than a footnote in automotive history. Our Model 3 cost us $56,000, and by that standard alone, the ownership experience so far has been unacceptable. But this is no ordinary $56K car. We put down a $1,000 deposit to get on a two-year waiting list for this car and it’s falling apart.

Early adopters who could spend six figures on a car such as the Model S might’ve given Tesla a bit of extra leeway. Maybe they figure it’s a small price to pay for such a technologically advanced car. Maybe it’s a sacrifice they’re willing to make to avoid using fossil fuels and get free access to the carpool lane. This far into its run, though, and with a car intended for mass appeal, Tesla should have the bugs worked out. It clearly doesn’t.

dmacleo
September 30, 2018 9:14 am

offer rejected

https://www.breitbart.com/tech/2018/09/28/report-elon-musk-rejected-tesla-sec-settlement-at-last-minute/

Tesla CEO Elon Musk reportedly pulled out of a settlement with the Securities Exchange Commission (SEC) over charges of fraud at the last minute, because it would “not be truthful to himself.”

dmacleo
September 30, 2018 9:16 am

disregard my last comment please, looks like the initial reject was BEFORE (by few hours) this offer accepted.
sorry.

Bitter&twisted
September 30, 2018 9:25 am

I think “Enron” Musk got off far too lightly.
He is a serial con-artist who should be sharing a cell with Bernie Madoff.

Robert W. Turner
September 30, 2018 9:34 am

There should just be a rule made by congress, if you are basing your financial decisions on Tweets, then you are a twit and deserve what you get.

Tom in Florida
Reply to  Robert W. Turner
September 30, 2018 12:46 pm

No rule like that needed. Simple case of not doing your due diligence before buying a stock. Many people buy with a hope and a prayer and they are soon gone from the market. Let nature take it’s course.

drednicolson
Reply to  Tom in Florida
October 1, 2018 10:50 am

And if you’re taking your company public and don’t want shares sold short, run it in such a way that people won’t be betting on your failure. Finishing a quarter or two in the black would be good start.

ATheoK
September 30, 2018 10:28 am

Forced to step down from Tesla’s CEO…

It looks to me that Musk just bamboozled, (or colluded with), the Federal government.
Musk just dumped the whole Tesla money pit problem onto others.

Musk goes scot-free.
$20 million fine? Chump change to Musk. Now he’ll go sell batteries to Australia while working on his next wonder product.

drednicolson
Reply to  ATheoK
October 1, 2018 10:51 am

Stepping down from being chairman of the board. Still CEO.

ResourceGuy
September 30, 2018 11:30 am

If only it was so quick and easy to fine political climate statements and related public funding mismanagement.

R Davis
September 30, 2018 12:02 pm

Article after article tells me that Elon Musk is just no good at anything much – a JINX even.

Ve2
September 30, 2018 3:19 pm

Got off lightly, he should have forced to buy back all of the shares he conned people into buying.

dan no longer in CA
Reply to  Ve2
September 30, 2018 8:47 pm

There are several private lawsuits pending against the company representing stockholders that lost money as a result of the twitter statements. It seems to me that the SEC results will be referenced in those suits, regardless of the size of the SEC sanctions.

William Astley
September 30, 2018 5:35 pm

The kiss of death for Tesla would be that the new model 3 which is the future of the company has loads and loads of problems.

The more one looks the worst the situation looks.

Tesla is beyond in trouble.

At this point in time it appears Tesla’s fate is sealed, it does not matter what Musk says or does.

https://www.cheatsheet.com/money-career/the-biggest-problems-tesla-model-3-owners-have-reported.html/

When the measured Green Car Reports wrote that Model 3 “build quality was the worst we have seen on any new car from any maker over the last 10 years,” we knew there was trouble. A report in the Los Angeles Times noted similar feedback from owners.

In one case, an owner couldn’t unlock the car with an electronic key card or the iPhone app. Since there is no metal key, he had to summon a Tesla technician to come and use a portable battery to open the hood.

1. Shutdowns while driving
In January, a Model 3 owner posted a video of her car shutting down while she was driving. Suddenly, an alert warning “Car Shutting Down — PULL OVER SAFELY” appeared on the screen. She did so, rebooted, then got the same shutdown warning and loss of power.

Later, when Tesla techs looked at it, they diagnosed the problem as “failure in the high voltage controller,” for what it’s worth. In commenting on the shutdown, a Model X owner said it had happened to him in the past and offered instructions on how to pull over safely.

He also offered helpful tips. “If you have a passenger, as this person did, recording the warnings may help the technician. Then, remember the reboots!”

https://www.greencarreports.com/news/1115659_tesla-model-3-quality-is-terrible-but-does-it-matter-to-buyers

Tesla Model 3 quality is terrible, but will it matter to buyers?

…The build quality of the early Model 3 we tested in late February was, in a word, appalling. …
Before we were even able to visit the owner, the car had to go back to the Tesla service center to have the central touchscreen replaced.

You know, the one required to control virtually any aspect of the car except for turn signals, headlights, and wipers?

During the test itself, two things became clear: The Model 3 works largely as intended, and the build quality was the worst we have seen on any new car from any maker over the last 10 years.

The flaws and defects broke down into two categories: those that affected the functioning of the car or the owner’s driving experience, and those that didn’t.

The first group included:
• The defective touchscreen and all the follow-on effects (above)
• Persistent creaks and groans from the console or dash
• An intermittent loud buzz from the upper right-hand center door pillar at highway speeds on some road surfaces
• A steering vibration (in a car with just 1,000 miles)

Different owners have suffered blown main fuses in their Model 3 battery packs, varying and unexplained error messages that power down the car, and numerous other issues.

Roger Knights
September 30, 2018 6:26 pm

To follow this drama closely, and to read somewhat more informed opinion on Tesla and Musk, visit https://seekingalpha.com/symbol/TSLA

RAH
October 1, 2018 5:39 am

So Musk crashes and burns. Can Tesla be far behind? I don’t think so. Hope the investors in it were rich enough that they could afford their loss on that high stakes gamble.

Hermit.Oldguy
October 6, 2018 1:40 pm

Meanwhile, YouTube uses its “recommend” system to sell the idea of an imminent market crash _every day_.

John Tillman
October 6, 2018 2:06 pm

TSLA hasn’t yet fallen to its 52 week low, but is still dropping faster than the major indexes from their recent highs.

John Tillman
Reply to  John Tillman
October 8, 2018 12:27 pm

TSLA got within less than five bucks of its 52-week low ($244.59) today.

The company is looking for an executive officer to manage Musk.

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