No idea if this has legs, but my suspicion is "no". Musk was essentially required to sell those shares in order to fund the twitter deal that he desperately wanted out of. It's not like he knew...
No idea if this has legs, but my suspicion is "no". Musk was essentially required to sell those shares in order to fund the twitter deal that he desperately wanted out of. It's not like he knew earnings would suck and cashed out. He knew earnings would suck and instead tried to play stupid games and won a stupid prize.
Edit-
This has spawned a whole thread about this, but I'm going to put what I should have at the start, which is the burden of proof for insider trading:
Prosecutors must prove that the defendant actually received information, that the information was both “material” and “nonpublic,” and that the information directly influenced the defendant's trade.
This is notoriously hard to prove when people are 100% sure it was insider trading. Let alone in a weird case like Musks.
This has some serious legs, all other stock sell offs have happened with scheduled sell-offs (as expected) but this specific set of sell-offs was not. If I remember right, this is the first time...
No idea if this has legs
This has some serious legs, all other stock sell offs have happened with scheduled sell-offs (as expected) but this specific set of sell-offs was not. If I remember right, this is the first time he has ever done that, and he did not post his due diligence after the fact as required, so that he could keep it secret. This is on top of the current SEC investigation from how he didn't publicly acknowledge his 10% stake in Twitter as he was required to by law, until well after.
The insider trading could seriously be the one thing that could have him removed and banned from trading, or holding an executive seat or any seat in any company, for life.
As a Tesla company, I hope this happens so badly. Would he be forced out of SpaceX (formerly known as SpaceTwitter) too or is it only for public companies?
holding an executive seat or any seat in any company, for life.
As a Tesla company, I hope this happens so badly. Would he be forced out of SpaceX (formerly known as SpaceTwitter) too or is it only for public companies?
That doesn't make it better. Just because he used the cashout to buy something stupid doesn't mean that he wasn't cashing out before the stock took a hit.
He knew earnings would suck and instead tried to play stupid games and won a stupid prize.
That doesn't make it better. Just because he used the cashout to buy something stupid doesn't mean that he wasn't cashing out before the stock took a hit.
I think i was being too glib and the point was missed. He was not, at all, intending to cash out. He fought extremely hard in court to do exactly the opposite. He was literally forced to cash out...
I think i was being too glib and the point was missed.
He was not, at all, intending to cash out. He fought extremely hard in court to do exactly the opposite. He was literally forced to cash out due to his own dumb actions, and all that money instantly went into buying twitter.
Having insider knowledge and being forced to trade is still insider trading isn't it? It could affect what exactly he chose to sell and he has an obligation to report that to the regulators. An...
Having insider knowledge and being forced to trade is still insider trading isn't it? It could affect what exactly he chose to sell and he has an obligation to report that to the regulators. An alternative would be having Tesla announce the information publicly before any trades, though I don't know what regulations surround that.
He's a career investor. He knows the rules.
Edit: my partner has told me that taking out a loan on his Tesla/other stocks would have been the correct thing to do in that scenario and well within his capacity. He did take out a loan, but only on Twitter stocks.
I think that’s going to be the center of the case if I’m correct about what they’re filling about( which I absolutely might not be). If I hear that there’s a bad earnings report but then have a...
Having insider knowledge and being forced to trade is still insider trading isn't it?
I think that’s going to be the center of the case if I’m correct about what they’re filling about( which I absolutely might not be).
If I hear that there’s a bad earnings report but then have a deal go south and a contractually obligated to fulfill the gap, and thus must sell stock, is that insider trading?
I certainly say that in the spirit of the law it’s probably a no if you never intended to sell otherwise, but that matters little in the cases
Yes, he in fact did have to sell that stock in order to finance the deal. He had already included it as part of the financing package deal with the banks.
Yes, he in fact did have to sell that stock in order to finance the deal. He had already included it as part of the financing package deal with the banks.
I feel like the way you're asking this question shows a misunderstanding of how these things work. The short version is that Musk had, for a portion of the finance deal, billions in bank loans...
I feel like the way you're asking this question shows a misunderstanding of how these things work.
The short version is that Musk had, for a portion of the finance deal, billions in bank loans secured, yes, by the Tesla stock.
Correct me if I'm wrong, but securing a loan against a stock does not involve selling the stock. The accusation here is about him selling stocks whilst knowing their price would drop, not him...
Correct me if I'm wrong, but securing a loan against a stock does not involve selling the stock. The accusation here is about him selling stocks whilst knowing their price would drop, not him taking out a loan on Tesla (which is 100% fine). The loans are unrelated to the conversation.
This is where it gets to the edge of my knowledge. The short version is that Musk was sued for specific performance on the twitter deal and lost badly. He HAD to close the deal. Should some part...
This is where it gets to the edge of my knowledge.
The short version is that Musk was sued for specific performance on the twitter deal and lost badly. He HAD to close the deal.
Should some part of the agreed upon equity not come through, he would've been forced to emergency sell tesla stock. This would incur all sorts of potential issues given how these things are handled, but obviously the market itself would react negatively to that, likely costing Musk waaaay the fuck more than original anticipated.
The argument is that by selling early he had more than enough cash to cover his portion of the twitter deal (both the liquid he was required to provide plus some level of breathing room should anything go awry on his side and he be required to come up with more).
The point being that he needs to show up with $X and he pulled out $X + Y. You could argue he did that because knew the earnings report was bad and saw this as a silver lining to the shitstorm of the twitter deal, and if you could somehow prove that, I do think that would qualify as insider trading.
It is however pretty reasonable, given my amateur understanding of the twitter deal and the weird weird financing behind it, to pull out more to be safe.
Personally, while I have no doubt Musk will violate securities law left, right, and sideways, i'm suspicious hes even smart enough to have connected the dots on the bad earnings knowledge and the chance to use the utter fuckup that the twitter deal was to turn that around. Maybe some laywer made their bonus by pointing it out, but good luck proving any of that.
We rarely, if ever, get insider trading convictions on seriously powerful people in part because it's so insanely hard to prove.
No, I'm familiar with secured loans. But I didn't know whether the deal he had with the banks was backed by his Tesla stock specifically, which is why I was asking.
No, I'm familiar with secured loans. But I didn't know whether the deal he had with the banks was backed by his Tesla stock specifically, which is why I was asking.
Yes, yes it is. Aside from the fact that he likely didn't have to sell any stock he also had far more stocks than just Tesla. Let me phrase it this way:
If I hear that there’s a bad earnings report but then have a deal go south and a contractually obligated to fulfill the gap, and thus must sell stock, is that insider trading?
Yes, yes it is. Aside from the fact that he likely didn't have to sell any stock he also had far more stocks than just Tesla.
Let me phrase it this way:
I have good word that stock A is likely going to fall in value but I'm not allowed to act on that information because it is material and non-public. I am currently being forced to pay a large sum of money, so I should prioritise selling stock A to gather those funds because A will lose value soon. This won't be suspicious because I'm being publically forced to procure money so it is out of my hands at this point.
Unless you purposefully put yourself in the situation to be “forced” to sell as a way to bypass insider trading laws. I think Musk is too dumb to have set that up, and it would be immensely...
Unless you purposefully put yourself in the situation to be “forced” to sell as a way to bypass insider trading laws.
I think Musk is too dumb to have set that up, and it would be immensely difficult to prove.
No, the question is: You seem hellbent on ignoring that last line, because yeah if Musk was forced to trade due to unforseen circumstances, that is not sufficient.
No, the question is:
Prosecutors must prove that the defendant actually received information, that the information was both “material” and “nonpublic,” and that the information directly influenced the defendant's trade.
You seem hellbent on ignoring that last line, because yeah if Musk was forced to trade due to unforseen circumstances, that is not sufficient.
I'm not sure where you get the idea from that I'm ignoring that. I've been trying to explain that having to procure money on a tight schedule does not absolve him of insider trading. Like, did he...
I'm not sure where you get the idea from that I'm ignoring that. I've been trying to explain that having to procure money on a tight schedule does not absolve him of insider trading. Like, did he know before he made the deals to sell Tesla that Tesla's stocks will drop? That's what this hinges on, as making the trade at that time was beneficial to him and would very likely pass that last line.
See this is where I think where were kinda going in circles. Musk needs to have sold his shares BECAUSE of the insider information. If he sold his shares solely because he was on a tight schedule,...
I've been trying to explain that having to procure money on a tight schedule does not absolve him of insider trading.
See this is where I think where were kinda going in circles. Musk needs to have sold his shares BECAUSE of the insider information.
If he sold his shares solely because he was on a tight schedule, yes I believe by word of law it does in fact absolve him. The prosecution needs to prove all 3 points, not just one.
You would need to prove that he sold his share because of the earnings report, which is going to be next to impossible to prove when (if he shuts the fuck up) his lawyers will show up and say "so there was this twitter thing you may have heard about...."
Yeah i've seen that theory before and I just don't buy it from all sorts of angles. If he wanted to pull some 4d chess move to sell the stock, there were better ways to do it that didn't cost him...
Yeah i've seen that theory before and I just don't buy it from all sorts of angles. If he wanted to pull some 4d chess move to sell the stock, there were better ways to do it that didn't cost him a tremendous amount of money.
No idea if this has legs, but my suspicion is "no". Musk was essentially required to sell those shares in order to fund the twitter deal that he desperately wanted out of. It's not like he knew earnings would suck and cashed out. He knew earnings would suck and instead tried to play stupid games and won a stupid prize.
Edit-
This has spawned a whole thread about this, but I'm going to put what I should have at the start, which is the burden of proof for insider trading:
This is notoriously hard to prove when people are 100% sure it was insider trading. Let alone in a weird case like Musks.
This has some serious legs, all other stock sell offs have happened with scheduled sell-offs (as expected) but this specific set of sell-offs was not. If I remember right, this is the first time he has ever done that, and he did not post his due diligence after the fact as required, so that he could keep it secret. This is on top of the current SEC investigation from how he didn't publicly acknowledge his 10% stake in Twitter as he was required to by law, until well after.
The insider trading could seriously be the one thing that could have him removed and banned from trading, or holding an executive seat or any seat in any company, for life.
As a Tesla company, I hope this happens so badly. Would he be forced out of SpaceX (formerly known as SpaceTwitter) too or is it only for public companies?
That doesn't make it better. Just because he used the cashout to buy something stupid doesn't mean that he wasn't cashing out before the stock took a hit.
I think i was being too glib and the point was missed.
He was not, at all, intending to cash out. He fought extremely hard in court to do exactly the opposite. He was literally forced to cash out due to his own dumb actions, and all that money instantly went into buying twitter.
Having insider knowledge and being forced to trade is still insider trading isn't it? It could affect what exactly he chose to sell and he has an obligation to report that to the regulators. An alternative would be having Tesla announce the information publicly before any trades, though I don't know what regulations surround that.
He's a career investor. He knows the rules.
Edit: my partner has told me that taking out a loan on his Tesla/other stocks would have been the correct thing to do in that scenario and well within his capacity. He did take out a loan, but only on Twitter stocks.
I think that’s going to be the center of the case if I’m correct about what they’re filling about( which I absolutely might not be).
If I hear that there’s a bad earnings report but then have a deal go south and a contractually obligated to fulfill the gap, and thus must sell stock, is that insider trading?
I certainly say that in the spirit of the law it’s probably a no if you never intended to sell otherwise, but that matters little in the cases
But he didn't have to sell stock, right? He had to turn up with the cash, but the source of that cash was up to him.
Yes, he in fact did have to sell that stock in order to finance the deal. He had already included it as part of the financing package deal with the banks.
He specifically put the Tesla stock into the deal? Not assets in general, but those specific shares?
I feel like the way you're asking this question shows a misunderstanding of how these things work.
The short version is that Musk had, for a portion of the finance deal, billions in bank loans secured, yes, by the Tesla stock.
Correct me if I'm wrong, but securing a loan against a stock does not involve selling the stock. The accusation here is about him selling stocks whilst knowing their price would drop, not him taking out a loan on Tesla (which is 100% fine). The loans are unrelated to the conversation.
This is where it gets to the edge of my knowledge.
The short version is that Musk was sued for specific performance on the twitter deal and lost badly. He HAD to close the deal.
Should some part of the agreed upon equity not come through, he would've been forced to emergency sell tesla stock. This would incur all sorts of potential issues given how these things are handled, but obviously the market itself would react negatively to that, likely costing Musk waaaay the fuck more than original anticipated.
The argument is that by selling early he had more than enough cash to cover his portion of the twitter deal (both the liquid he was required to provide plus some level of breathing room should anything go awry on his side and he be required to come up with more).
The point being that he needs to show up with $X and he pulled out $X + Y. You could argue he did that because knew the earnings report was bad and saw this as a silver lining to the shitstorm of the twitter deal, and if you could somehow prove that, I do think that would qualify as insider trading.
It is however pretty reasonable, given my amateur understanding of the twitter deal and the weird weird financing behind it, to pull out more to be safe.
Personally, while I have no doubt Musk will violate securities law left, right, and sideways, i'm suspicious hes even smart enough to have connected the dots on the bad earnings knowledge and the chance to use the utter fuckup that the twitter deal was to turn that around. Maybe some laywer made their bonus by pointing it out, but good luck proving any of that.
We rarely, if ever, get insider trading convictions on seriously powerful people in part because it's so insanely hard to prove.
No, I'm familiar with secured loans. But I didn't know whether the deal he had with the banks was backed by his Tesla stock specifically, which is why I was asking.
Yes, yes it is. Aside from the fact that he likely didn't have to sell any stock he also had far more stocks than just Tesla.
Let me phrase it this way:
Unless you purposefully put yourself in the situation to be “forced” to sell as a way to bypass insider trading laws.
I think Musk is too dumb to have set that up, and it would be immensely difficult to prove.
You can't bypass insider trading laws like that. The question here is "did he have insider information" not "did he have an excuse".
No, the question is:
You seem hellbent on ignoring that last line, because yeah if Musk was forced to trade due to unforseen circumstances, that is not sufficient.
I'm not sure where you get the idea from that I'm ignoring that. I've been trying to explain that having to procure money on a tight schedule does not absolve him of insider trading. Like, did he know before he made the deals to sell Tesla that Tesla's stocks will drop? That's what this hinges on, as making the trade at that time was beneficial to him and would very likely pass that last line.
See this is where I think where were kinda going in circles. Musk needs to have sold his shares BECAUSE of the insider information.
If he sold his shares solely because he was on a tight schedule, yes I believe by word of law it does in fact absolve him. The prosecution needs to prove all 3 points, not just one.
You would need to prove that he sold his share because of the earnings report, which is going to be next to impossible to prove when (if he shuts the fuck up) his lawyers will show up and say "so there was this twitter thing you may have heard about...."
Yeah i've seen that theory before and I just don't buy it from all sorts of angles. If he wanted to pull some 4d chess move to sell the stock, there were better ways to do it that didn't cost him a tremendous amount of money.
Yeah i'm aware. Just responding to Weldawadyathink who was talking about it.