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Elon Musk: A Black Hole in the Information Universe
Elon Musk, the enigmatic CEO of Tesla and SpaceX, has always been a controversial figure. Known for his bold statements and unorthodox approach to business, Musk has often been at the center of media attention. However, there is a side of Musk that is rarely discussed – his role as a black hole in the information universe.
When it comes to information, Elon Musk seems to be impervious. It is as if information cannot pass through him and instead bends around him. He is incomprehensibly large and infinitely boring. But why are we forced to contemplate Musk once again? The answer lies in the recent actions taken by the US Securities and Exchange Commission (SEC).
The SEC Takes Elon Musk to Court
The SEC has filed a lawsuit against Elon Musk for his refusal to testify in an investigation related to his purchases of Twitter shares and his statements regarding the $44 billion acquisition of the social media platform. In a statement filed in federal court in California, the SEC revealed that it is conducting an ongoing non-public investigation into whether Musk has violated various provisions of the federal securities laws.
What’s the Fuss About?
At first glance, the SEC’s investigation may seem like a big deal. However, upon closer inspection, it appears to be much ado about nothing. Most of the issues raised by the SEC are related to red tape and disclosure requirements surrounding Musk’s purchase of Twitter shares.
Here’s a summary of the timeline of events:
– Musk started buying Twitter shares in January 2022.
– By March 14, the value of the shares had risen by more than 5%, triggering the requirement to disclose the purchase within 10 calendar days.
– March 24 passed, and Musk continued to buy Twitter stock.
– On March 26, Musk reached out to Twitter directors to discuss his participation and the possibility of joining the board.
– These conversations continued until early April, with Musk revealing a 9.2% stake in Twitter on April 4.
– On April 5, Twitter announced that Musk would join its board of directors pending routine background checks.
– However, on April 9, Musk informed Twitter that he would not join the board and intended to take the company private.
The SEC’s investigation primarily focuses on the delayed disclosure of Musk’s purchases and whether they violated securities laws. While it is true that Musk may have saved some money due to the delayed disclosure, the financial impact does not seem significant considering his other investments.
The Low-Stakes Stalemate
What we have now is essentially a low-stakes stalemate between Musk and the SEC. Musk was scheduled to provide testimony to the SEC on September 15 but failed to show up. He was then offered the opportunity to testify in Texas, which he objected to on several grounds. The SEC subsequently issued a subpoena, which Musk publicly criticized.
It’s worth noting that the SEC’s investigation into Musk’s Twitter purchases began in May 2022. Despite providing testimony on two occasions, Musk now accuses the SEC of using subpoena powers to harass him. While this accusation may seem far-fetched, given Musk’s apparent guilt, it is not entirely baseless.
The SEC’s investigation seems to be prolonging unnecessarily, despite the clear timeline of events surrounding Musk’s Twitter purchases. It is unclear what additional infractions the SEC is investigating, but it is possible that they are complicating the matter.
Conclusion: Musk Plays by His Own Rules
In the end, it seems that no matter what the SEC’s conclusion is, Musk will continue to play by his own rules. He has often shown a disregard for regulations and a willingness to push boundaries. This doesn’t come as a surprise considering his personality and entrepreneurial spirit.
While the SEC’s investigation into Musk’s Twitter purchases may be important from a regulatory standpoint, it doesn’t seem to have significant financial implications. The delayed filings and potential lack of appropriate documentation may raise some eyebrows, but the sums involved are relatively small for someone like Musk.
Despite the ongoing legal battle between Musk and the SEC, it is unlikely to have any major impact on Musk’s standing or his ability to steer his companies in his desired direction. At the end of the day, Musk will continue playing in the online arcade because that’s what he does best.
In today’s ever-changing landscape, regulatory battles like the one between Musk and the SEC are becoming more common. As technology continues to evolve, so do the challenges faced by regulators and innovators alike. It is essential to strike a balance between fostering innovation and ensuring compliance with the law.
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Sources:
– SEC complaint filed in federal court in California.
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Elon Musk is a black hole. Information cannot pass through him and bends around him. He is incomprehensibly large and infinitely boring.
We are forced once again to contemplate Musk because Thursday the SEC did something:
The US securities regulator is taking Elon Musk to court over his refusal to testify in an investigation into his purchases of Twitter shares and his statements related to the $44 billion acquisition of the social media platform.
In a statement filed Thursday in federal court in California, the Securities and Exchange Commission said it was conducting an “ongoing non-public investigation” into whether Musk had “violated various provisions of the federal securities laws” in connection with “his purchases of Twitter shares”. ” and “his 2022 filings and SEC filings related to Twitter.”
THE storage is here and, like so many things in the Muskoverse, it’s less interesting than first impressions might suggest. Most of it is red tape, relating to the disclosure of stock purchases in the days before Musk’s takeover offer on Twitter.
FTAV has nerd on the details already more than oncebut to summarize:
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Musk started buying Twitter shares on the last day of January 2022.
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By March 14, its share had risen more than 5%, so the deadline to disclose the purchase was 10 calendar days.
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March 24 came and went as he continued to regularly buy Twitter stock.
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On March 26, Musk reached out to Twitter directors, including founder Jack Dorsey, to talk about his participation and whether there was a place for him on the board.
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These conversations continued until early April. Walter Isaacson reports his biography on Musk that on March 31, Twitter staff booked an Airbnb farm (with “tractors and donkeys”) near the San Jose airport so CEO Parag Agrawal and board chairman Bret Taylor could discuss terms with Musk.
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On April 3, Twitter invited Musk to join its board of directors and sent out his standard contract.
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On April 4, Musk revealed a 9.2% stake in Twitter. He did it via backdated n 13G programwhich is a form intended for passive shareholders.
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Also on April 4, Musk told Twitter that he didn’t like the idea of being muzzled, but that he would be willing to cap his 15% stock purchase. Twitter’s board of directors accepted his requests.
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Twitter announced on April 5 that Musk would join its board of directors (pending routine background checks, etc., which would take a few days).
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Also on April 5, Musk filed a 13D Programlong-term disclosure of holdings for investors who are not passive.
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Musk told Twitter on April 9 that he would not join the board of directors and instead intended to take the company private. Twitter announced the first part to shareholders on April 10 and hired Goldman Sachs to handle the second part.
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Musk made his formal offer to buy Twitter on April 13, then made the letter public on April 14.
One obvious issue from the above is the extra time Musk had to buy Twitter stock. Shares rose 27% when his stake went public belatedly, so the delay probably saved him some money, though not That much.
An investor, Marc Bain Rasella, last year is suing Musk for unspecified damages stating that the late filings meant that Twitter shareholders had sold shares at “artificially deflated prices”. His first complaint estimates that Musk saved about $143 million by filing 11 days late a second bringing the figure to $200 million, but neither shows detailed operation. Our rough estimates are a little lower, but it doesn’t matter: the sums don’t seem particularly significant for a person who was simultaneously making $3 billion bets on dogecoin.
But obviously the principles of the sacredness of the market matter more than profit. How much are those worth? The SEC last month charged to six investors for repeatedly late filing settlement forms that had a combined value of $90 million, without showing any evidence of having benefited financially. Fines for individuals ranged from $120,000 to $150,000.
A second issue concerns appropriate documentation. Using Schedule 13G was in effect a promise by Musk not to “affect control of the broadcaster.” The SEC did it a high threshold for what counts as influence however, and the campaign for UI changes probably doesn’t top it.
Company directors can’t get away with abbreviated 13G disclosures, of course, and neither can shareholders who tell management about significant corporate actions such as asset sales. But could Musk? It’s possible, since the board invitation had just arrived at the time he made the episode public, but the sequence of events between late March and early April makes it hard to say for sure.
We also could not find any SEC executive orders related to filing a 13G instead of a 13D. Kristin Giglia, writing in the Columbia Law Reviewcalls 13G abuse “a seemingly accepted but unaddressed aspect of securities markets.”
The third problem is that Musk’s first form did not include the clause required in Article 10 of 13G on the commitment not to seek to influence the control of the issuer. (SEC Office of Mergers and Acquisitions asked this at that time. Musk has not responded publicly.)
The shape was a mistake or an attempt to exploit a loophole? We have no way of knowing, and the prosecutor most likely wouldn’t know either, although Musk’s defense in the Rasella class action lawsuit cited the absence of the blurb as evidence that 13G was not misleading investors,”much less intentionally.” Maybe the standard issue is more important than it seems, because it doesn’t seem very important.
What we have then is a low-stakes stalemate. Musk was due to provide testimony to the SEC in San Francisco on September 15, but failed to show. He was then offered the opportunity to testify closer to home in Texas, but he raised what the regulator calls “several spurious objections.”
After the SEC issued its subpoena, Musk tweeted:
The SEC began investigating Musk’s Twitter purchases in May 2022. After providing testimony twice already, Musk now accuses the SEC of using subpoena powers to harass him, which isn’t such a crazy accusation given his apparent guilt.
An investigation into late disclosure alone could have been closed moments after opening simply by referring to a timetable. Presumably, however, the additional possible infractions are complicating matters, although it’s unclear what this extra work is for. Whatever the SEC’s conclusion, Musk will ignore it and continue playing the online arcade, because that’s what he does.
“Enough is enough,” Alex Spiro, a lawyer for Musk, said yesterday. Detached.
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