Finance

Elon Musk’s Not The Only Ego In The Courtroom For SEC’s Tesla Tweet Contempt Showdown

SEC personnel should think more about who they are supposed to be protecting and less about the mean things Elon Musk said about them.

By  
on

Elon Musk (Photo by Diego Donamaria/Getty Images for SXSW)

Elon Musk has many admirable, some even damn near superhuman, qualities. Modesty is not among them. And it’s alright for someone who’s accomplished so much to be a little into himself. I suffer from a milder form of the same affliction myself.

It’s probably a shock to learn that attorneys (gasp!) often have egos the size of the Falcon Heavy. Nowhere was that more apparent than in the Manhattan federal courthouse last Thursday, where Elon Musk himself showed up to contest the U.S. Securities and Exchange Commission’s motion to hold him in contempt.

SEC Complained That Grown Man Elon Musk Failed To Get Approval For A Tweet

Some quick background for those of you new to this (dumb) controversy: nearly a billion news cycles ago, in August, Elon Musk tweeted that he was “considering” taking electric carmaker Tesla private at a generous $420 per share. The SEC promptly (for them) filed a complaint accusing Musk of violating 17 C.F.R. § 240.10b-5. This original accusation was shaky at best and Musk settled with the SEC in a matter of days.

The thrust of the settlement agreement was a big fine. But, like your drunk friend who was unflatteringly lighted in a bar selfie, it also required preapproval for future social media posts. Tesla was to establish a board committee to oversee Musk’s social media posts, and Elon was to run his tweets by this board committee before posting, at least if they contained information that would be “material” to Tesla shareholders like me.

Turns out Mr. Musk wasn’t really interested in cautiously running his Twitter feed by board committee, and on February 19 tweeted that Tesla would build 500,000 cars in 2019. He quickly corrected that with another tweet clarifying that the automaker would actually only make more like 400,000 cars during the calendar year of 2019, but would be constructing vehicles at an annual rate of 500,000 by year’s end. All of this was already public information. Fuming, not so much about the content of the tweets as the fact that Musk didn’t vet them by committee, the SEC filed a motion asking the U.S. District Court for the Southern District of New York to hold Elon Musk in contempt for violating the settlement agreement.

Sponsored

Agency’s Mission Underserved By SEC’s Attempt To Punish Tesla CEO

“The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” I copied that right from their website. But nobody at the SEC apparently cares that it is their own repeated efforts to punish Musk that keep tanking Tesla’s stock, hurting Tesla investors large and small. A few people at the SEC seem to have lost sight of whose interests they are actually supposed to be watching out for. Instead, they have made a point of going after someone who has frequently taunted the agency and emphatically stated on national TV, “I want to be clear: I do not respect the SEC.”

Look, part of every government worker’s job in this country, for better or worse, is to calmly listen to criticisms from citizens, even the prominent ones. And part of every lawyer’s job is to promote the best interests of his or her client, which sometimes means swallowing one’s own pride. This is not easy or pleasant for the individual actors in these roles, but it is important. Someone at the SEC needs to consider how the agency could possibly be protecting investors with this crusade to police Elon Musk’s Twitter feed against the dangers of disclosing publicly available information and being a little imprecise with phrasing on a limited-character social media platform that the President of the United States spends most mornings plastering with outright lies.

The SEC will indeed have the chance to reconsider, thanks to the wisdom of Judge Alison Nathan. She gave Musk and the SEC two weeks following the contempt hearing to renegotiate and clarify the 2018 settlement agreement. “Put your reasonableness pants on,” Judge Nathan said to both sides in open court. And, although there are no signs of progress yet, I hope they do.

SEC personnel should think more about who they are supposed to be protecting and less about the mean things Elon Musk said about them. As for Elon himself if he somehow stumbles across this article: an apology goes a long way to salve bruised egos. Apologizing could help out the small investors who are really trying to support you, and it might also have some legs as a means to just let you get on with saving the world. Some of the best advice I recently gave a 12-year-old applies here: you don’t have to mean it, you just have to say it.

Sponsored

Jonathan Wolf is a litigation associate at a midsize, full-service Minnesota firm. He also teaches as an adjunct writing professor at Mitchell Hamline School of Law, has written for a wide variety of publications, and makes it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.

Topics

, , , , ,