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Elon Musk Trying to Commit “Suicide by SEC”
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Elon Musk Trying to Commit “Suicide by SEC”

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SAN FRANCISCO – March 2, 2019

The arrogant and extreme behavior of Elon Musk, who violates all formal and informal laws of business ethics, makes one suspect that he is deliberately trying to annoy the Securities and Exchange Commission so that the authorities would expel him from the post of Tesla's CEO, and he would leave with his head held high as a martyr and the victim of the system, and not as a failed leader and a fraudster.

This theory has already been expressed by some analysts. The Los Angeles Times has written on the new evidence for this hypothesis:

https://www.latimes.com/business/hiltzik/la-fi-hiltzik-elon-musk-sec-contempt-20190226-story.html

The sad and tragic phenomenon of individuals goading police officers into shooting them is sufficiently common to have earned the nickname “suicide by cop.”

Disillusioned with life, psychopaths attack the police, who quickly shoot the poor fellows.

In the case of Elon Musk, his oddities and antics over the past six months can be explained by an attempt to commit "suicide by the SEC." This refers to suicide in terms of a business career, and not complete, but only partial, but the essence of the comparison lies precisely in the way the action is performed.

The Securities and Exchange Commission has the authority to seek his removal from the management of Tesla for violations of exchange legislation. And it seems that Musk is strongly provoking the Commission to do it.

The fact is that “the brilliant inventor and visionary” Musk has gotten into a very difficult situation. He was talented, selling  investors and shareholders on a pack of lies, but fulfilling the promises didn't go too well.

The company's quotes skyrocketed, billions of dollars were invested in it, but Tesla could not reach the annual profits and establish an effective mass production of electric vehicles that wouldn’t be limited to elite market segments. 10 years ago, the Tesla brand looked extremely attractive, promising and almost without alternative, but much has happened since that time, and competitors in the face of traditional automakers and ubiquitous Chinese start-ups, producing their own electric cars, are catching up.

Meanwhile, the Musk corporation has accumulated huge debts -- in 2019 alone, $1.5 billion had to be paid. Tesla's financial directors are resigning one after another, and short-selling investors on the stock exchange are constantly betting on the collapse of the company's shares. Anyway, Tesla's chronic problems have been written about in detail.

And so, in order to avoid shame and the destruction of his business’ reputation, which is almost inevitable in the case of Tesla’s bankruptcy or expulsion by decision of the Board of Directors, Musk wants to be kicked out by the SEC for some controversial trick that violates the exchange rules, and not for real mistakes or serious crimes.

Remember Musk's most famous trick last year, when he, being "high," tweeted that he was going to buy out all Tesla public stocks at a price of $420, a substantial premium over its price at the time. The tweet said funding for the transaction was “secured.” In fact, there was no funding, and Musk had taken no significant steps toward any such deal. His tweet set off a brief trading frenzy in Tesla stock and caught the SEC’s attention instantaneously.

 For this, the SEC accused Musk of exchange-related fraud, as his tweet was an obvious manipulation:

The September settlement covered more than merely the requirement that Tesla establish a pre-approval process for any Musk tweets that might carry material information about the company. Musk and Tesla each were fined $20 million. Musk was forced to relinquish his post as chairman, though he was allowed to remain as CEO. The company was required to add two new outside directors, part of a seemingly endless effort to dilute the influence of Musk sycophants on its board.

Perhaps Musk wanted this provocation to end more harshly for him. Or the whole story was just a test case for the SEC.

It will be even better for Musk if the SEC removes him from the post of Tesla’s CEO not for violating the exchange code, but simply for being rude to the Commission.

By the way, no indications have surfaced that Musk or the board has taken the SEC’s implicit warnings in this settlement to heart. Within weeks, he taunted the commission in a tweet as the “Shortseller Enrichment Commission,” a reference to his opinion that Tesla short sellers are trying to drive down the company’s stock.

Then the SEC just has swallowed it. However, Musk did not want to leave the elephant alone and continued attempts to tame the supervisory authority.

On Monday, the SEC asked a federal judge in New York to declare Musk in contempt of court. The SEC hasn’t said what penalty it would like to see imposed on Musk, but its motion isn’t good news for Tesla, which as we write is off by about 1.5% in early Nasdaq trading, to about $294.

The SEC claim is as follows. On February 19, Musk tweeted that Tesla will make 500,000 cars in 2019. This information is as material as it comes, since the electric vehicle manufacturer’s production pace is among its most widely watched metrics.

SEC noticed this tweet and accused Musk of, firstly, that he published it without a request from the board of directors, and secondly, that the figure mentioned did not correspond to the company's actual plans.

Musk was forced to backtrack within hours, issuing a second tweet stating that he “meant to say” that Tesla would reach an “annualized production rate at end of 2019 probably around 500k, ie 10k cars/week.” This is a significant difference, and another manipulation that Musk himself exposed under pressure from the SEC.

Most amazingly, Musk continued to poke at the SEC with further tweets Monday and Tuesday, starting within a couple of hours of the agency’s contempt motion. He claimed his Feb. 19 tweets merely reiterated earlier disclosures by the company — “SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k. How embarrassing...” he tweeted Monday night. Then, on Tuesday at 4:25 a.m., he tweeted, “Something is broken with SEC oversight.”

It’s possible that the market is getting fed up with Musk and his shenanigans. “If anyone else antagonized the SEC twice they would call for his removal,” CNBC trading guru Jim Cramer tweeted Tuesday morning.

Another manifestation of disrespect for the SEC was an interview in December with Lesley Stahl on 60 Minutes. He acknowledged that his tweets were still unsupervised and tried to rewrite the SEC agreement. The only tweets needing pre-approval, he said, were those that “had a probability of causing a movement in the stock…. Otherwise, it’s ‘Hello, 1st Amendment.’ Like freedom of speech is fundamental.”

Moreover, he told Stahl: “I want to be clear. I do not respect the SEC.” (To be fair, the interview aired on Dec. 9, and Tesla didn’t enact its “senior executives communications policy” codifying the review of Musk’s tweets until Dec. 11.)

From a rational point of view, it is extremely difficult to explain such open disrespect for the SEC, as well as for a court that is assigned to monitor the implementation of the pre-trial agreement. That is if we assume that Musk acts solely in the interests of Tesla, and does not pursue his personal goals.

Musk has expressed frustration with the pressures of running Tesla and managing its production in the past. He probably wants to leave the company not just to preserve his reputation, but also to relax and not to go crazy with such hard work. However, he, as captain, cannot just abandon his ship.

Therefore, to cause a storm on the part of the SEC, so that it washed him off the bridge and removed the responsibility for the further fate of the company is an excellent strategy for Musk. Thus, he will get a chance to swim somewhere else, instead of going down because of the holes he has made in the ship's hull.

This is a good theory, which explains a lot in Musk’s behavior, although we cannot exclude the fact that he simply acts under the influence of emotions or pathological narcissism.

The SEC takes into account image and political risks for itself, and most likely will not take decisive action until Musk either leaves himself or brings Tesla to bankruptcy. But let's give it a shot. We’ll probably be seeing new episodes of the saga Musk and the SEC.

Author: USA Really