Is The Greatest Short Squeeze Of ALL TIME One That May Put Elon Musk In Jail?

Tuesday may very well go down in history. And, yes, you're right. It's yet another story of Tesla's Elon Musk stealing headlines across the globe.

He really is a modern day PT Barnum. Musk is running the greatest show on earth. There just may be one problem.

Musk may be looking at jail time.

According to reports from various financial news sources, Musk's now famous "going private" tweet is subject to a lot of scrutiny via the Securities and Exchange Commission (SEC). As of tonight, reports stemming from The Wall Street Journal indicate the SEC is looking into the matter.

Essentially, what it comes down to is whether or not Musk was being forthright in his claims. Was the funding actually secured? Also, it doesn't help that he put a specific price of $420/share out there. If he just said that he was "thinking of taking TSLA private," it would be a different animal.

All that said, I'm left wondering: Was Musk's tweet simply stock manipulation OR do you believe he's ready to move on from the public markets, Spies?

If Musk is successful in going private, it would be a $70+ billion dollar deal.

"...When you announce the price, it certainly smells like market manipulation," he added. "If any part of it isn't true, he could certainly be facing legal liability. It's surprising that the CEO of a company would announce news like that..."

"...If his comments were issued for the purpose of moving the price of the stock, that could be manipulation, and it could also be securities fraud," Pitt said. "The use of a specific price for a potential going-private transaction is highly unprecedented, and therefore raises significant questions about what his intent was. So that would have to be investigated..."

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runninglogan1 - 8/9/2018 2:21:04 AM

-2 Boost

Nah.

CANADIANCOMMENTS - 8/9/2018 8:10:51 AM

0 Boost

The USA is a nation of laws, especially when it comes to other people's money. You really, really don't want to mess with the SEC. As Trump supporter and Congressman Christopher Collins (and his son and his son's future father in law) just found out, insider trading is still a big no and may wind you up in jail. If Musk doesn't have funding he will face the letter of the law too and the wrath of the SEC. But I don't think he is playing games. The tyranny of being a publically traded firm (the quarterly reporting alone) makes most wish they were privately held. The SEC and its rules apply to everyone. BTW as LBO's go, this would be a whopper.

Agent00R - 8/9/2018 8:16:02 AM

+1 Boost

Yup, a $70+B whopper.

MDarringer - 8/9/2018 8:56:55 AM

-1 Boost

Says the hubristic Canadian...#hypocrite

TomM - 8/9/2018 10:22:03 AM

-3 Boost

THe Canadian apparently knows the laws of the USA better than the third rate used car salesman who has Alzheimers.

THe fact is - when you become an elite manager of any US company that is public - your statements should be written - and cleared with the legal counsel BEFORE you make them public. Millions of dollars of investments could be riding on what you say or do not say or even imply. In this case - Musk KNEW that lots of investors were shorting his stock - so his statement about having financing to take the company private BETTER BE TRUE - or he will be subject to SEC fines plus investor lawsuits.

mre30 - 8/9/2018 2:49:13 PM

+4 Boost

Love it...I am going to end each of my future Telsa comments with

#enron2.0

...which really encapsulates all that is wrong with the Tesla situation.

Where are the Enron people today? In Jail or Dead.

PUGPROUD - 8/9/2018 9:32:35 AM

+6 Boost

He will likely get hit with a big SEC fine (maybe $1 billion+) and be sued in multiple class action suits by investors who were financially disadvantaged by his misstatements. These will be major distractions to Musk personally and take time from him running the business. When you think you are the smartest person in the room, you're not!

Vette71 - 8/9/2018 11:01:22 AM

+7 Boost

Interesting tidbit in the WSJ write-up. Tesla's $920 million convertible bonds have a March 2019 deadline and there is a clause that says if the Tesla stock is above $359.87/share the bonds roll into Tesla stock. Below that strike price the company has to fork over $920M cash. The bond holders may balk at Tesla going private and their shares are not liquid. The tweet put the stock price well above that mark. The pressure on Musk is intense.

rockreid - 8/9/2018 12:28:40 PM

-2 Boost

FYI Tesla’s Board just confirmed Elon Musk has met with the board starting last week proposing such a private sale. It would not suprise me if the Saudis go full throttle into such a sale as they have a massive Sovereign Wealth Fund to tap into and already own about 5% of Tesla. The Chinese also would likely be another massive investment opportunity, and let’s not go into Apple and its massive pile of cash and lack of car building infrastructure.... we’ll see as this is looking more and more to be a serious deal.

Vette71 - 8/9/2018 1:34:24 PM

+5 Boost

The problem remains in the way Elon did it. When a public company has a significant event like this they are required by law to file a 8-K statement with SEC that outlines the details. That is the first knowledge of the event that anyone outside the management of the company and the Board should receive, period. In this case the details would be who is funding the transaction, what the terms are, etc. etc. You don't do this stuff in a Tweet. It may be a serious deal, but Elon is still in a lot of hot water. Lawsuits galore.

malba2367 - 8/9/2018 1:52:48 PM

0 Boost

I don’t think Musk was trying to manipulate markets...he was just being a moron posting something like that on Twitter. The problem for that is that as the ceo of a publicly traded company he is not allowed to make reckless or materially false statements which may affect share prices. He may not go to Jail but he will definitely be sanctioned and fined.

PUGPROUD - 8/9/2018 2:49:20 PM

+6 Boost

Let's face it. Musk recently had a hissy fit over issues, questions and second guessing that comes with running a public company and got way ahead of himself and SEC regulations in trying to orchestrate and say "F**k you, I'm out of hear!" Someone should tell him that when you find yourself in a hole, stop digging.

mre30 - 8/9/2018 3:04:45 PM

+4 Boost

Thanks for that insight, Malba.

Next time a person screws up, just use the "I'm a moron" defense. Good strategy.

Board should fire Musk.

malba2367 - 8/9/2018 9:45:36 PM

0 Boost

@mre for him to go to jail would require proof that he was trying to manipulate stock prices and not just making reckless statements. Firing him would be a horrible move at this point as his ability to charm investors and create an aura around the brand is all that is holding up the house of cards.

Vette71 - 8/9/2018 11:13:47 PM

+5 Boost

As PUGPROUD said it will be huge fines because he broke the law and a slew of class action lawsuits. The Board is also culpable in this and there will be suits that include them. If he is spending all his time on defence and not managing the company or the stock drops (lost investor confidence) they may drop the hammer on him. The SEC could negotiate that as part of a settlement. Look all the top folks losing their jobs with "ME TO", VW, etc.