After federal judge Alison Nathan told Tesla and the SEC to “put your reasonableness pants on” earlier this month, lawyers for Tesla hammered out a new agreement that clarifies what Elon Musk can and cannot say without getting permission from
his mommy company lawyers. Depending on who you ask, the original tweet from last year that got Musk in hot water with the SEC would be perfectly legal under the terms of the new agreement. Judge Nathan will get a chance to approve the deal next week.
Musk originally got in trouble last year when he tweeted he was thinking of taking Tesla private and had already lined up the financing to do so. The SEC cried foul and asked the court to remove him from his position on the board of directors and as CEO of Tesla. To hear the government tell it, the only thing that would make the SEC happy would be if Musk was strapped into an interplanetary spaceship and sent on a one way trip to Mars.
The SEC dragged Tesla and Musk back into court after a tweet in February that said Tesla would build 500,000 cars in 2019. A few hours later, Musk amended the tweet to say the company would build 400,000 cars this year but be on pace to make 500,000 cars a year by the end of 2019.
The SEC went nuts, claiming Musk was guilty of deliberately violating last year’s consent order and committing every offense imaginable, including mopery on the high seas. In theory, if found guilty of contempt of court, Musk could have been fined or even jailed for his impertinence.
According to the New York Times, both sides have agreed to a new consent order that enumerates 9 things Elon must not do without first getting prior approval from “any experienced securities lawyer” employed by the company. The list includes comments about Tesla’s financial condition, future earnings, proposed acquisitions, and production data. It also covers any “nonpublic legal or regulatory findings or decisions” and any event that Tesla would have to disclose to the SEC in a regulatory filing.
In a footnote, the new agreement says, “This list is not intended to be an exhaustive list of topics.” In other words, Musk could still find himself in trouble with the SEC if he says or does anything that august body deems inappropriate. Musk has pilloried the SEC in public, calling it the Shortseller Enrichment Commission. There is no love lost between Musk and the SEC.
“This removes an overhang on the stock that has been a sideshow,” Dan Ives, an analyst with Wedbush Securities, tells the Washington Post. “Tesla has enough bad news on its plate, so this removes one headache … with the focus now core demand and profitability.”
Much Doo Doo About Nothing
Conservatives Reactionaries love to beat their chest and roar about “government overreach, but if there is a clearer case of the government going overboard to punish a supposed miscreant than its vendetta against Tesla, it’s hard to think what that might be. And what are the consequences of the SEC’s action?
Are all CEOs of companies listed on a US stock exchange bound by the same restrictions as Elon Musk? Does that mean the SEC should be going after the heads of every fossil fuel company for lying to their investors for decades about the financial risks of burning coal, oil, and gas? Does it mean it will now hold the feet of Wall Street bankers to the fire if they peddle worthless securities to their customers? Silly rabbit, not in this lifetime.
And what of the broad mandate given to corporations by the US Supreme Court in Citizens United to say and do anything they damn well please because they have some newly manufactured right of free speech guaranteed to them in the Constitution? Does that blanket endorsement apply only to some corporations and not others?
In other words, what we are left with as a result of the SEC’s jihad against Tesla is a steaming pile of grade A government horseshit. As has been said many times, the United States has a legal system. What it lacks is a justice system, one that honors the phrase “Equal Justice Under Law” emblazoned over the front door of the Supreme Court building in Washington.
What’s sauce for the goose is not sauce for the gander in America. Not any longer. Not while handpicked delegates of the tyrant in the Oval Office can act with impunity to afflict one business corporation but not others. When the government consents to do the bidding of some citizens — corporate or otherwise — to the detriment of others, all pretense of democracy is destroyed. Elon and other disrupters of the status quo — especially those who dare challenge the hegemony of fossil fuel companies — would do well to bear that in mind.