SEC sues Musk for securities fraud

[Imperium Anglorum]

There's no different standard of proof. In criminal cases you can't be tried in absentia unless you were present when the trial began and then either refused to be present further or made your continued presence impossible

In civil law the defendant doesn't actually have to be there provided they have an attorney present and they weren't required to appear by notice or subpoena. If they don't show up and neither does their representation it's a default judgement.

I believe this is correct. Got confused between civil and criminal proceedings. Whoops.

[Lord Dominator]

This was just filed into the Docket by the judge in the case: https://www.courtlistener.com/recap/gov ... 55.4.0.pdf

ORDERED that counsel
for all parties appear for an initial pretrial conference with the Court on Friday, February 1st,
2019 at 4:00pm in Courtroom 906 of the United States District Court for the Southern District
of New York, Thurgood Marshall U.S. Courthouse at 40 Foley Square, New York, New York.

"The courts take even longer to decide things than the Senate." #prequelmemes.

Any idea why the date would be that long from now, or is that fairly standard?

[Imperium Anglorum]

Any idea why the date would be that long from now, or is that fairly standard?

I believe it's pretty standard. Federal courts, especially the ones in really large cities, have heavy caseloads.

[Northwest Slobovia]

This was just filed into the Docket by the judge in the case: https://www.courtlistener.com/recap/gov ... 55.4.0.pdf

ORDERED that counsel
for all parties appear for an initial pretrial conference with the Court on Friday, February 1st,
2019 at 4:00pm in Courtroom 906 of the United States District Court for the Southern District
of New York, Thurgood Marshall U.S. Courthouse at 40 Foley Square, New York, New York.

"The courts take even longer to decide things than the Senate." #prequelmemes.

Any idea why the date would be that long from now, or is that fairly standard?

That's four months from now, which seems a bit long, but consider that the courts and everybody else will be busy for the holidays.

[Lord Dominator]

Any idea why the date would be that long from now, or is that fairly standard?

I believe it's pretty standard. Federal courts, especially the ones in really large cities, have heavy caseloads.

Good to know, wasn't sure

[Ethel mermania]

This was just filed into the Docket by the judge in the case: https://www.courtlistener.com/recap/gov ... 55.4.0.pdf

ORDERED that counsel
for all parties appear for an initial pretrial conference with the Court on Friday, February 1st,
2019 at 4:00pm in Courtroom 906 of the United States District Court for the Southern District
of New York, Thurgood Marshall U.S. Courthouse at 40 Foley Square, New York, New York.

"The courts take even longer to decide things than the Senate." #prequelmemes.

Any idea why the date would be that long from now, or is that fairly standard?

It allows them to fully develope the case, and gives the parties time to settle.

[Kaggeceria]

Left-wingers used to love Musk because he put out cool enviro-friendly cars and sent shit into space.

Then he started shitting on socialists and the media and now they hate him.

[Salandriagado]

Banning from serving on a public board is pretty steep. He is majority shareholder of tesla, and it means he can't take spaceX public.

Not really. It just means he needs to work through a proxy, or restructure so that the US company is a wholely-own-subsidiary of a company registered somewhere that hasn't banned him from serving on a public board, then be on the board of that foreign-registered company.

[Ethel mermania]

Banning from serving on a public board is pretty steep. He is majority shareholder of tesla, and it means he can't take spaceX public.

Not really. It just means he needs to work through a proxy, or restructure so that the US company is a wholely-own-subsidiary of a company registered somewhere that hasn't banned him from serving on a public board, then be on the board of that foreign-registered company.

How does he make it a wholy owned sub of a company he controls? which he does not have the money to do.

Which is the point of the SEC action in the first place.

[Salandriagado]

Not really. It just means he needs to work through a proxy, or restructure so that the US company is a wholely-own-subsidiary of a company registered somewhere that hasn't banned him from serving on a public board, then be on the board of that foreign-registered company.

How does he make it a wholy owned sub of a company he controls? which he does not have the money to do.

Which is the point of the SEC action in the first place.

Ah, sorry, that was awfully worded and confused between the various companies involved. What I meant was roughly that he sets up a company in some other country somewhere, sells all of his stocks to that company, and uses the votes from said stocks to appoint people to the board who will do what he tells them.

[Ethel mermania]

How does he make it a wholy owned sub of a company he controls? which he does not have the money to do.

Which is the point of the SEC action in the first place.

Ah, sorry, that was awfully worded and confused between the various companies involved. What I meant was roughly that he sets up a company in some other country somewhere, sells all of his stocks to that company, and uses the votes from said stocks to appoint people to the board who will do what he tells them.

That does make more sense, thanks.

Musk owns about 20% of tesla, he would have to have the cooperation of the rest of the board, and a sizeable chunk of ownership to pull it off. Also that will seriously piss off the SEC which will make his raising capital for any other project he does more difficult.

My own guess is that they will settle, maybe musk will agree to temporarily serve a suspension

[Northwest Slobovia]

Banning from serving on a public board is pretty steep. He is majority shareholder of tesla, and it means he can't take spaceX public.

Not really. It just means he needs to work through a proxy, or restructure so that the US company is a wholely-own-subsidiary of a company registered somewhere that hasn't banned him from serving on a public board, then be on the board of that foreign-registered company.

I'm not sure if the SEC is that stupid; it's pretty clear on beneficial owners. But let's assume it is. Let's also assume that a US company controlled by a foreign entity would be allowed to go public on a US exchange even if its owner was banned by the SEC, and that people would be willing to buy its stock.

I have my doubts that the military would let a such a company launch military payloads, and I suspect NASA would be under intense political pressure to do the same. (Assuming neither is illegal already, which it might be.) That leaves commercial customers. They're unlikely to be willing to pay a "Mars fantasy" premium.* While SpaceX is presently the only company in the reusable rocket market, that's not gonna remain true forever, or even for very long. And at that point, SpaceX's competitive advantage is ... what? A dodgy ownership structure? If Musk was tired of short sellers running Tesla, he ain't seen nothin' yet.

*: Nor a premium for the development of manned spaceships. Only NASA will do that, and if Musk ends up in serious legal trouble, they may be pushed into picking Boeing's spaceship.

[Northwest Slobovia]

My own guess is that they will settle, maybe musk will agree to temporarily serve a suspension

Why would the SEC settle for so little? They seem to have him dead to rights.

[Ethel mermania]

Not really. It just means he needs to work through a proxy, or restructure so that the US company is a wholely-own-subsidiary of a company registered somewhere that hasn't banned him from serving on a public board, then be on the board of that foreign-registered company.

I'm not sure if the SEC is that stupid; it's pretty clear on beneficial owners. But let's assume it is. Let's also assume that a US company controlled by a foreign entity would be allowed to go public on a US exchange even if its owner was banned by the SEC, and that people would be willing to buy its stock.

I have my doubts that the military would let a such a company launch military payloads, and I suspect NASA would be under intense political pressure to do the same. (Assuming neither is illegal already, which it might be.) That leaves commercial customers. They're unlikely to be willing to pay a "Mars fantasy" premium.* While SpaceX is presently the only company in the reusable rocket market, that's not gonna remain true forever, or even for very long. And at that point, SpaceX's competitive advantage is ... what? A dodgy ownership structure? If Musk was tired of short sellers running Tesla, he ain't seen nothin' yet.

*: Nor a premium for the development of manned spaceships. Only NASA will do that, and if Musk ends up in serious legal trouble, they may be pushed into picking Boeing's spaceship.

SpaceX is private. This will impact his ability to take it public. While maintaining some sort of control of if.

I will say though I think the potentisl impact on spaceX, will push musk to settle the tesla case.

[Northwest Slobovia]

I'm not sure if the SEC is that stupid; it's pretty clear on beneficial owners. But let's assume it is. Let's also assume that a US company controlled by a foreign entity would be allowed to go public on a US exchange even if its owner was banned by the SEC, and that people would be willing to buy its stock.

I have my doubts that the military would let a such a company launch military payloads, and I suspect NASA would be under intense political pressure to do the same. (Assuming neither is illegal already, which it might be.) That leaves commercial customers. They're unlikely to be willing to pay a "Mars fantasy" premium.* While SpaceX is presently the only company in the reusable rocket market, that's not gonna remain true forever, or even for very long. And at that point, SpaceX's competitive advantage is ... what? A dodgy ownership structure? If Musk was tired of short sellers running Tesla, he ain't seen nothin' yet.

*: Nor a premium for the development of manned spaceships. Only NASA will do that, and if Musk ends up in serious legal trouble, they may be pushed into picking Boeing's spaceship.

SpaceX is private.

Yup. I was answering Salandriagado's argument for how it might go public with him having some measure of control over it. Sorry if that wasn't clear.

[Salandriagado]

SpaceX is private.

Yup. I was answering Salandriagado's argument for how it might go public with him having some measure of control over it. Sorry if that wasn't clear.

Oh yeah, it's not practical, (though the obvious simple version: simply getting some loyal proxy in the job instead, seems far more so), just not impossible.

[Lord Dominator]

https://www.nytimes.com/2018/09/28/busi ... -deal.html
Looks like there had been a settlement reached, but not being able to say "I did nothing wrong" was too much for him

[Northwest Slobovia]

https://www.nytimes.com/2018/09/28/business/elon-musk-tesla-sec-deal.html
Looks like there had been a settlement reached, but not being able to say "I did nothing wrong" was too much for him

Yup. The sad thing is that for a while I supported Musk. I wasn't a True Fan, but SpaceX was steadily making progress on rocketry, Tesla was behind schedule but also improving, and so if Musk got a little overconfident because of SpaceX's success, so be it. But over time, overconfidence has turned into arrogance, and The Elon Musk Story™ has turned into Downfall.

[Chestaan]

Left-wingers used to love Musk because he put out cool enviro-friendly cars and sent shit into space.

Then he started shitting on socialists and the media and now they hate him.

Left wingers always hated Musk. Even before the whole union busting thing came out, he was a billionaire and hence part of the problem.

[Ethel mermania]

https://www.nytimes.com/2018/09/28/business/elon-musk-tesla-sec-deal.html
Looks like there had been a settlement reached, but not being able to say "I did nothing wrong" was too much for him

Takes a lot of ego to do that, I wonder if it takes that much ego to get where he was as well.

[Dooom35796821595]

https://www.nytimes.com/2018/09/28/business/elon-musk-tesla-sec-deal.html
Looks like there had been a settlement reached, but not being able to say "I did nothing wrong" was too much for him

Yup. The sad thing is that for a while I supported Musk. I wasn't a True Fan, but SpaceX was steadily making progress on rocketry, Tesla was behind schedule but also improving, and so if Musk got a little overconfident because of SpaceX's success, so be it. But over time, overconfidence has turned into arrogance, and The Elon Musk Story™ has turned into Downfall.

And it ends in a bunker in LA, with Musk shouting “FEGELEIN! FEGELEIN!! FEGELEIN!!!”

[Imperium Anglorum]

Settlement reached between SEC and Musk. https://www.courtlistener.com/recap/gov ... 55.6.0.pdf

2. Without admitting or denying the allegations of the complaint (except as provided herein in paragraph 13 and except as to personal jurisdiction as to this matter only and subject matter jurisdiction, which Defendant admits), Defendant hereby consents to the entry of the final Judgment in the form attached hereto (the “Final Judgment”) and incorporated by reference herein, which, among other things:

(a) permanently restrains and enjoins Defendant from violation of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5];

(b) orders Defendant to pay a civil penalty in the amount of $20,000,000 under Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]; and

(c) requires Defendant to comply with the undertaking set forth in this Consent and incorporated in the Final Judgment . . .

5. Defendant undertakes to:

(a) resign from his role as Chairman of the Board of Directors of Tesla, Inc. (“Chairman”) within forty-five (45) days of the filing of this Consent and agree not to seek reelection or to accept an appointment as Chairman for a period of three years thereafter. Upon request by Defendant, the Commission staff may grant in its sole discretion an extension to the deadline set forth above;

(b) comply with all mandatory procedures implemented by Tesla, Inc. (the “Company”) regarding (i) the oversight of communications relating to the Company made in any format, including, but not limited to, posts on social media (e.g., Twitter), the Company’s website (e.g., the Company’s blog), press releases, and investor calls, and (ii) the pre-approval of any such written communications that contain, or reasonably could contain, information material to the Company or its shareholders; and

(c) certify, in writing, compliance with undertaking (a) set forth above. The certification shall identify the undertaking, provide written evidence of compliance in the form of a narrative, and be supported by exhibits sufficient to demonstrate compliance. The Commission staff may make reasonable requests for further evidence of compliance, and Defendant agrees to provide such evidence. Defendant shall submit the certification and supporting material to Steven Buchholz, Assistant Regional Director, U.S. Securities and Exchange Commission, 44 Montgomery Street, 28th Floor, San Francisco, CA 94104, with a copy to the Office of Chief Counsel of the Enforcement Division, 100 F Street NE, Washington, DC 20549, no later than fourteen (14) days from the date of the completion of the undertaking.

[Petrolheadia]

Settlement reached between SEC and Musk. https://www.courtlistener.com/recap/gov ... 55.6.0.pdf

2. Without admitting or denying the allegations of the complaint (except as provided herein in paragraph 13 and except as to personal jurisdiction as to this matter only and subject matter jurisdiction, which Defendant admits), Defendant hereby consents to the entry of the final Judgment in the form attached hereto (the “Final Judgment”) and incorporated by reference herein, which, among other things:

(a) permanently restrains and enjoins Defendant from violation of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5];

(b) orders Defendant to pay a civil penalty in the amount of $20,000,000 under Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]; and

(c) requires Defendant to comply with the undertaking set forth in this Consent and incorporated in the Final Judgment . . .

5. Defendant undertakes to:

(a) resign from his role as Chairman of the Board of Directors of Tesla, Inc. (“Chairman”) within forty-five (45) days of the filing of this Consent and agree not to seek reelection or to accept an appointment as Chairman for a period of three years thereafter. Upon request by Defendant, the Commission staff may grant in its sole discretion an extension to the deadline set forth above;

(b) comply with all mandatory procedures implemented by Tesla, Inc. (the “Company”) regarding (i) the oversight of communications relating to the Company made in any format, including, but not limited to, posts on social media (e.g., Twitter), the Company’s website (e.g., the Company’s blog), press releases, and investor calls, and (ii) the pre-approval of any such written communications that contain, or reasonably could contain, information material to the Company or its shareholders; and

(c) certify, in writing, compliance with undertaking (a) set forth above. The certification shall identify the undertaking, provide written evidence of compliance in the form of a narrative, and be supported by exhibits sufficient to demonstrate compliance. The Commission staff may make reasonable requests for further evidence of compliance, and Defendant agrees to provide such evidence. Defendant shall submit the certification and supporting material to Steven Buchholz, Assistant Regional Director, U.S. Securities and Exchange Commission, 44 Montgomery Street, 28th Floor, San Francisco, CA 94104, with a copy to the Office of Chief Counsel of the Enforcement Division, 100 F Street NE, Washington, DC 20549, no later than fourteen (14) days from the date of the completion of the undertaking.

Does that mean Musk out of Tesla?

Maybe they'll switch from making gimmicks to making quality cars.

[The South Falls]

Settlement reached between SEC and Musk. https://www.courtlistener.com/recap/gov ... 55.6.0.pdf

2. Without admitting or denying the allegations of the complaint (except as provided herein in paragraph 13 and except as to personal jurisdiction as to this matter only and subject matter jurisdiction, which Defendant admits), Defendant hereby consents to the entry of the final Judgment in the form attached hereto (the “Final Judgment”) and incorporated by reference herein, which, among other things:

(a) permanently restrains and enjoins Defendant from violation of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5];

(b) orders Defendant to pay a civil penalty in the amount of $20,000,000 under Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]; and

(c) requires Defendant to comply with the undertaking set forth in this Consent and incorporated in the Final Judgment . . .

5. Defendant undertakes to:

(a) resign from his role as Chairman of the Board of Directors of Tesla, Inc. (“Chairman”) within forty-five (45) days of the filing of this Consent and agree not to seek reelection or to accept an appointment as Chairman for a period of three years thereafter. Upon request by Defendant, the Commission staff may grant in its sole discretion an extension to the deadline set forth above;

(b) comply with all mandatory procedures implemented by Tesla, Inc. (the “Company”) regarding (i) the oversight of communications relating to the Company made in any format, including, but not limited to, posts on social media (e.g., Twitter), the Company’s website (e.g., the Company’s blog), press releases, and investor calls, and (ii) the pre-approval of any such written communications that contain, or reasonably could contain, information material to the Company or its shareholders; and

(c) certify, in writing, compliance with undertaking (a) set forth above. The certification shall identify the undertaking, provide written evidence of compliance in the form of a narrative, and be supported by exhibits sufficient to demonstrate compliance. The Commission staff may make reasonable requests for further evidence of compliance, and Defendant agrees to provide such evidence. Defendant shall submit the certification and supporting material to Steven Buchholz, Assistant Regional Director, U.S. Securities and Exchange Commission, 44 Montgomery Street, 28th Floor, San Francisco, CA 94104, with a copy to the Office of Chief Counsel of the Enforcement Division, 100 F Street NE, Washington, DC 20549, no later than fourteen (14) days from the date of the completion of the undertaking.

Does that mean Musk out of Tesla?

Maybe they'll switch from making gimmicks to making quality cars.

I know one crashing stock.

[Lord Dominator]

That was quite the quick turnaround