Who’s in charge of musk? Securities and Exchange Commission of the United States


Tencent technology news on June 3: in the past few years, the US Securities and Exchange Commission has been trying to make Elon Musk, Tesla’s chief executive, behave more like a typical enterprise leader, but it has not played any role.
In 2018, the Committee sued musk and Tesla on the grounds that regulators believed that they had published fraudulent tweets, eventually settled the case with a total fine of $40 million, and changed Tesla’s corporate governance. As part of the deal, it also designed a unique way to limit Musk’s social media habits: forcing the company to pre approve any statements musk might make that would drive the company’s share price up or down.
According to the latest media reports, officials of the US Securities and Exchange Commission wrote to Tesla twice in 2019 and 2020, saying that some of Musk’s tweets should be subject to necessary supervision. Tesla disagreed and told the committee that his information was not covered by the agreement.
Although regulators often urge companies to improve compliance after scandals or failures, there is no precedent for communication regulatory policy in financial law enforcement. Limiting how a reckless CEO communicates with the public and investors will only lead to more fights with musk and Tesla. Tesla seems to understand its regulatory role.
“Because musk is closely related to Tesla, any serious enforcement action against musk is likely to harm the company and shareholders,” said David Rosenfeld, a law professor at the University of Northern Illinois who once served on the securities and Exchange Commission“ This may turn out to be counterproductive. Musk has been playing with fire because he knows he can get away with it. ”
The regulator said Tesla never performed its oversight duties. According to media reports, the U.S. Securities and Exchange Commission believes that the way musk continues to post information on twitter violates the court’s decree. Tesla has not commented on the report so far.
Many small shareholders revel in Musk’s tough attitude towards regulators. Others are tired of the sight. Ross Gerber, chief executive of Gerber Kawasaki health and investment management, a Tesla shareholder, said he would like to see the company’s board step in to ease Musk’s Twitter behavior“ I’m disappointed with the lack of supervision, and I’m annoyed that musk seems to feel that his behavior is not subject to any criticism, “Garbo said.
In order to get the result it wants, the securities and Exchange Commission can go back to the federal court and ask the judge to sentence musk for contempt of court for violating the policy, so as to double the punishment of the policy. Regulators may also try to lift the whole deal and resume fraud litigation against musk, which could result in his being banned from the open market. But according to securities lawyers and legal researchers, neither option is attractive.
In early 2019, the securities and Exchange Commission tried to get U.S. District Judge Alison Nathan to force musk and Tesla to comply with the agreement, but it didn’t go as planned. Nathan told both sides to “put on the pants of reason” and solve the matter. In response, the SEC and Tesla agreed in April 2019 to narrow the list of items required for pre-approval. While the first agreement calls for oversight of any written communication that may be important to shareholders, the second agreement sets out eight to nine topics Tesla’s lawyers must review before musk can post them on twitter, including statements about production, forecasting and finance.
Urska velikonja, a law professor at Georgetown University who studies securities law enforcement, said the results were “not a clear victory” for the sec. She said the SEC’s lawyers may be reluctant to let the former judge hear the case again and may lose the case.
Given their hesitation over litigation, regulators have little choice. According to people familiar with the matter, senior officials of the securities and Exchange Commission decided last year to stop writing to Tesla, saying it didn’t work and made the agency seem powerless. One weapon the SEC can use, Mr. waliconja said, is to seek to ban Mr. musk from being an executive or director of a listed company. This punishment is more common in the Commission’s enforcement cases, but it requires that a person be shown to be in breach of anti fraud laws and unfit for a leadership role.
Mr. waliconja said the SEC banned 32 executives or directors in 2019. Elizabeth Holmes, founder of theranos, a blood testing start-up, agreed in March 2018 not to be an executive or director for 10 years. But theranos is a private company, while Tesla is a public company with a broad public shareholder base. Barring musk from entering the company could damage its future prospects and market value and risk damaging shareholders’ interests, lawyers said. Since musk has no new fraud charges, regulators may not try that. “There’s nothing the SEC can do now about how to limit Musk’s tweets,” Mr waliconja said( Compiled by Tencent technology / Wuji)