If anyone thought that Elon Musk had turned over a new leaf following a settlement with the Securities and Exchange Commission over illegally manipulating Tesla's stock price, think again. On Sunday, CBS' 60 Minutes interviewed the Tesla CEO, which gave Musk an opportunity to let the world know exactly what he thinks about SEC. Spoiler alert: not much.
As you may recall, this all started in August, when Musk took to Twitter to tell his 23.6 million followers that he had secured funding to return Tesla to private ownership via way of an oblique drug reference.
Despite adding "Funding secured," it turned out there was in fact no such commitment. The resulting yo-yo effect on Tesla's stock price led to a deluge of complaints with the SEC from investors both short and long who lost money as a result, and it caused us to question whether or not Musk's presence at Tesla was actually a good thing for the company.
In this case, the SEC took action rather rapidly. The South African-born CEO rejected the initial settlement offer, at which point the SEC sued him for fraud. By late September, the case was settled to avoid a trial; both Musk and Tesla were each fined $20 million. There were also several other conditions, including a requirement for Musk to step down as chairman of Tesla's board (he remains CEO) and for Tesla to institute some form of oversight over Musk's tweets to prevent similar situations from occurring in the future.
But there were almost immediate signs that Musk had no intention of being told what to do by any federal regulators, particularly not ones he dubbed the "Shortseller Enrichment Commission." Further eyebrows were raised when it was revealed that the new, supposedly independent board chairperson would be Robyn Denholm, the CFO of an Australian telecommunications company; she will remain in Australia for the time being.
Following Sunday's interview, there is no longer any need to read between the lines. Musk made it clear that, despite a settlement that requires "mandatory procedures… regarding oversight of communications relating to the Company made in any format, including but not limited to, posts on social media (e.g Twitter)," no one is looking over his shoulder or telling him not to tweet.
Stahl: Have you had any of your tweets censored since the settlement?
Musk: No.
Stahl: None? Does someone have to read them before they go out?
Musk: No.
Stahl: So your tweets are not supervised?
Musk: The only tweets that would have to be, say, reviewed, would be if a tweet had a probability of causing a movement in the stock.
Stahl: And that's it?
Musk: Yeah, I mean, otherwise it's "Hello, First Amendment." Like freedom of speech is fundamental.
Stahl: But how do they know if it's gong to move the market if they're not reading all of them before you send them?
Musk: Well I guess we might make some mistakes. Who knows?
Stahl: Are you serious?
Musk: Nobody's perfect.
Stahl: Look at you.
Musk: I want to be clear, I do not respect the SEC. I do not respect them.
In response to being asked whether Denholm was appointed to watch over Musk "like a babysitter," he rejected the very idea. "Thats not realistic, in the sense that Im the largest shareholder in the company, and I can just call for a shareholder vote and get anything done that I want," Musk told Stahl.
In a statement from Tesla to Ars on Monday, the company told us, "We can confirm the settlement is being complied with. This includes having a policy (which technically needs to be in place by December 28) that requires pre-approval of any communications that reasonably could contain material information."
Further, Tesla sent us a portion of the interview transcript regarding Musk's remarks about Denholm that had been edited down by 60 Minutes. In response to the "babysitter" question, Musk's full answer was as follows:
I mean thats not realistic, because I am the largest shareholder in the company and a very high percentage of the shareholders support me and the company. So essentially I could just pull for a shareholder vote and get anything that I want provided I could get support for at least a 1/3 of the other shareholders. Not certain, but likely. At the end of the day the shareholders pull the vote.
As Tesla pointed out, the settlement does not require oversight of Musk's Twitter feed until almost the end of the year, so technically Musk has not broken the agreement. However, it may not be coincidental that on Friday, the company announced it had hired Dale Butswinkas—a leading trial lawyer—as the company's new general counsel. He replaces Todd Maron, Musk's former divorce lawyer, who has headed up Tesla's legal department since 2013.
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Ars Technica
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