Mar 9, 2022 - Economy

Elon Musk tries to get out of his deal

A bald eagle and Elon Musk

Illustration: Sarah Grillo/Axios

Elon Musk is trying to back out of his 2018 settlement with U.S. securities regulators, related to his social media claim of having had "funding secured" to take Tesla private.

Driving the news: Musk this week asked a federal judge to terminate the consent decree, which required that Tesla counsel vet any of Musk's tweets that could be deemed material to the company and/or its shareholders.

  • Musk argues that the SEC is a micromanager overstepping its bounds, including via a subpoena over his November 2021 Twitter poll that asked followers if he should sell 10% of his Tesla stock.
  • That poll resulted in tens of billions of dollars being wiped off Tesla's market cap, and was posted just a day after Musk's brother Kimball (who serves on Tesla's board) sold over $100 million worth of stock.

Between the lines: Musk in court papers argues that he was coerced into playing ball with the SEC. Not only because a failure to do so could harm Tesla, but also because it could have harmed other companies with which he was affiliated, including SpaceX.

  • Musk also claims he “never lied” in his initial tweet on the supposed funding, which would have come from Saudi Arabia’s Public Investment Fund.
  • For evidence he points to a court filing in a different case, but the specifics related to his conversations with PIF and Tesla’s board are redacted. Some unredacted language suggests that what Musk had from PIF was a verbal commitment rather than anything in writing, although it’s unclear if even those conversations were specific about the $420 per share figure (the SEC has said they were not).
  • As we noted in 2018, anyone with a modicum of deal experience knows that you don't have "funding secured" via handshake. You have it via signed documents.
  • Musk may not think he lied but, unless there's a smoking exoneration in that redacted text, he did.

Musk is one of the most impactful entrepreneurs of the past two decades, if not the most. He has helped revolutionize disparate industries, including in ways that could improve life for generations to come.

He's also a prolific whiner. If you settle with the SEC, you'd better be prepared to accept enforcement of that settlement (including requests for information). Because you signed something — as opposed to just discussing it. If anyone should understand that difference by now, it's Elon Musk.

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