If you haven’t read the news yet, Elon Musk has been charged with fraud by the Securities and Exchange Commission for a tweet that he posted in August about taking Tesla private at an elevated value per share ($420).
At the time, Musk was swinging violently between calling the heroic cave divers in Thailand pedophiles and promising that the increased capacity of Tesla’s factories would finally bring the company towards the profit it has long promised. In the middle was this tweet:
Thanks to Twitter’s short and context-free format, the tweet raised many questions, such as the reason behind the elevated value and where the funding would come from. Speculation after the fact included the Saudis – the default go-to in this type of situation when someone needs to pull tens of billions of dollars out of thin air.
Like our unfortunate President, who uses Twitter as a battering ram, Musk does not tweet in the vacuum of space (yet). Turns out that the elevated value of $420 a share caused Tesla stock prices to surge, with new investors flocking for the chance of a strong pay-out, generating a lot of real money for the company.
If Elon had told someone that he was going to take the company private, and that person used that information to buy shares to capitalize on the sale, they would be charged with insider trading.
Musk’s tweet is essentially a variant of this, using inside information to derive capital gains. Laws abound to stop this type of activity to make sure that markets reflect public knowledge. Either he didn’t realize what he was doing (which the SEC points out as being so reckless that he shouldn’t be allowed to hold the reigns at a public company) or he did in on purpose to boost the stock. Maybe he did it just to see what would happen.
Either way, shit is serious now. The SEC suit is not just for fraud, it seeks to bar Musk from running any sort of public company. Iron Man might find himself out of a couple of jobs – if not in jail.
The Power of a Tweet
While jail is probably a long way off for a billionaire of such prominent status, Musk’s behavior is the latest example of how important social media has become in our lives. While many people dismiss Twitter and posts there as being “just a tweet” the consequences can be very real.
It is mind-boggling to me that people of that stature do not have teams to manage their personal social media – a team of sensible people who would’ve stopped Musk from tweeting (repeatedly) that a cave-diving rescuer was a “pedo guy” and would’ve also been able to see beyond the horizon that tweeting something stupid can have massive consequences.
Imagine if Musk is barred by the SEC from running Tesla. While the man might be crazy (and definitely doesn’t get enough sleep) he is certainly bringing humanity in the right direction. Men of his stature tend to get away with anything they want, but in today’s climate, being reckless is not an excuse for escaping culpability.