Monday, February 25, 2019

The Bear Awakens . . . .

A bunch of us sensed that it was coming.  I raised the question in an October 8, 2018 post here.  Now, it has actually happened.

Tesla Chief Executive Officer Elon Musk has finally caught the negative attention of the U.S. Securities and Exchange Commission (SEC) with yet another of his reckless tweets.  The WaPo reported earlier tonight that "[t]he Securities and Exchange Commission . . . asked a federal judge to hold Tesla CEO Elon Musk in contempt for violating the terms of a recent settlement agreement . . . ."  That settlement agreement, as readers will recall, relates to SEC allegations that Musk lied to investors when he posted on Twitter that he had secured the funding needed to take Tesla private.  The settlement agreement provides for the review and pre-approval of Musk's market-moving public statements.

Ann Lipton and I, as BLPB's resident fraud mongers, have been following the Musk affaire de Twitter for a number of months now.  (See, e.g., here, here, and here.)  Based on our prior posts, it seems clear the world was destined for this moment--a moment in which the SEC not only catches Musk in a tweeted misstatement but also can prove that the tweet was not pre-approved, as required under the terms of the settlement agreement.  The WaPo article notes evidence that breaches of the agreement may be the rule rather than the exception.  (Why does that not surprise me?)

Let's see where this goes next . . . .

https://lawprofessors.typepad.com/business_law/2019/02/the-bear-awakens-.html

Ann Lipton, Compliance, Current Affairs, Joan Heminway, Securities Regulation | Permalink

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