Excuse me for a moment while I point and laugh at a manchild who can’t stop his big idiot mouth from continuously getting in his own way (I could write that exact sentence about Donald Trump too).
Elon Musk seems determined to tweet away every bit of goodwill he has earned while aggressively pursuing clean energy businesses. After divers rescued the children stuck in the Thailand cave, Musk called one of the rescuers a pedophile. That diver is now suing Musk for defamation. That is but one of two litigious self-owns perpetrated by Musk via Twitter. Last month, I wrote a summary of how he inflated his stake in Tesla by $850 million in an afternoon with a single tweet.
Tesla was trading at around $343 when he sent the tweet out, and its stock shot up at this first-hand report that he was taking it private at the weed number: $420 per share. One problem? Tesla hasn't gone private at $420 per share, and falsely saying you are taking a company private at 22% higher than its current market price is the literal definition of illegal market manipulation. Per the Securities and Exchange Commission:
This case involves a series of false and misleading statements made by Elon Musk, the Chief Executive Officer of Tesla, Inc. (“Tesla”), on August 7, 2018, regarding taking Tesla, a publicly traded company, private. Musk's statements, disseminated via Twitter, falsely indicated that, should he so choose, it was virtually certain that he could take Tesla private at a purchase price that reflected a substantial premium over Tesla stock's then-current share price, that funding for this multi-billion dollar transaction had been secured, and that the only contingency was a shareholder's vote. In truth and fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source.
Excuse me, I’m coming down with a case of the giggles again.
Ok I’m better now. If you’re not as high on schadenfreude as I am, understand that I’m not happy about what’s happening to Tesla, just Musk. Tesla is a vitally important business in a world with most companies’ motivations pointed at making climate change worse, and it’s run by a buffoon who spends way too much time on Twitter revealing himself to be a fool.
Who calls a hero who saved children’s lives a pedophile? Who tweets out an incredibly serious change to his business like this without consulting his board? Who does it “because he had recently learned about the number’s significance in marijuana culture” and wanted to impress his girlfriend, Grimes (according to the SEC)? Elon Musk, that’s who.
While I have portrayed this as a laughing matter, know that Musk is in serious trouble. Per CNN:
The agency chose to charge Musk under Rule 10b-5 of the Exchange Act. That’s what the SEC uses to go after insider traders and market manipulators.
“It’s a very serious accusation,” said Thomas Gorman, partner at Dorsey & Whitney and a former SEC staffer.
[Professor at Columbia Law School, John] Coffee said in theory a judge could issue Musk a “lifetime” ban, permanently preventing him from serving as a corporate officer or director. Although the SEC did not request a specific time frame, it typically settles for less than a lifetime ban.
Now, I can feel my readers mounting the inevitable and correct counter-argument of “well no one went to prison for the 2008 financial crisis, the American judicial system clearly has separate laws for rich and poor, so why would anything happen to Musk?”
The answer is simple: because Musk ripped off other rich guys through this stunt. What he’s accused of is similar to what Martha Stewart spent five months in prison and two years of supervised release over. Only 54% of Americans own stock. This is an issue that affects the upper echelon of American finance more than anything, so laws matter now.
Musk is on record talking about his disdain for short-sellers (people who bet against the price of Tesla), and the value his tweet added to Tesla wiped that same amount off their bets. The motivation, the manipulation—it’s all there. On Twitter. It’s incredible. This is one of the most spectacularly stupid things I have ever witnessed. Musk is in big, big trouble, and I haven’t even mentioned the Justice Department’s separate investigation into this ordeal yet.
As far as crimes go, this one is perfectly fine for most of us to laugh at. The biggest victims are largely hedge fund managers, so call it karma for 2008. Tesla has grown to a point where it can survive without its supposed genius CEO—although given Musk’s deranged activities for all to see this past year, they may have already been surviving without him for a while.
Jacob Weindling is a staff writer for Paste politics. Follow him on Twitter at @Jakeweindling.