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Musk Says 'Funding Secured' Claim Sparked by Saudi Meeting
Elon Musk said interest from Saudi Arabia's sovereign wealth fund gave him the confidence to drop the bombshell last week that he was considering taking Tesla Inc. private. The Saudi Kingdom's Public Investment Fund had approached Musk going back almost two years about taking Tesla off the market, he wrote in a blog post Monday, confirming that the fund recently bought an almost 5 percent stake. Musk described a July 31 meeting in which the Saudi fund's managing director expressed regret that Tesla hadn't moved forward with a go-private transaction.
[...] Several investors have since sued Musk and Tesla, claiming the company's share price had been manipulated. The Securities and Exchange Commission is said to be intensifying its scrutiny of the company and its chief executive officer after having started gathering general information about Tesla and Musk's earlier public pronouncements about manufacturing goals and sales targets.
One of Tesla's biggest critics, Vertical Group analyst Gordon Johnson, read Musk's blog post as a walk-back maneuver from his "funding secured" tweet last week. He cited Musk's statement Monday that the Saudi fund's support for taking Tesla private was "subject to financial and other due diligence and their internal review process for obtaining approvals." "He is specifically stating that funding is not secured, and I think that's a big deal," Johnson, whose $93 price target on Tesla shares is the lowest among Wall Street analysts, said on Bloomberg Television. "The question then becomes, what does the SEC do here, and do the shareholders stick with him?"
Also at CNBC.
Previously: Elon Musk Considers Taking Tesla Private
(Score: 2) by aiwarrior on Monday August 13 2018, @09:57PM (11 children)
This!
Shorters are on derivatives markets, meaning they are for good and bad out of SEC rules. SEC rules also impose a lot of rules on investors, that derivatives investors do not need to abide to. To be honest the derivative options people need to take it as part of life.
(Score: 0) by Anonymous Coward on Monday August 13 2018, @10:10PM (9 children)
What does this mean? You mean if I go to fidelity and short sell a stock I am "on derivatives markets"?
(Score: 5, Informative) by Anonymous Coward on Tuesday August 14 2018, @12:26AM (8 children)
"derivatives" are standardized contracts. When you short, you buy the right to sell somebody elses stock, you're not actually selling stock you own. Because they aren't your shares, you don't have a contractual relationship with the issuer. In this case Tesla. Because Tesla didn't sell you anything, or promise you anything, there is no "consideration". Which is to say, that Tesla has sod all to do with whatever you bought.
Manufacturing companies are extremely cash intensive. Corporate raiders often attempt to crash these companies. They take them over, loot the cash in the form of CEO bonus's, and then dump secured debt in place of the cash. The problem with that, is that long term manufacturing cycles are effected by highly variable market factors, like inflation, consumer demand, interest rates etc. The reason they keep cash on hand is to weather these cycles. So what happens is the company is weakened by the takeover and limps along until it ultimately goes bankrupt years later. The corporate raiders get new jets, and the children whose fathers work at companies like Tesla, starve.
There are many kinds of derivatives. Derivatives are highly speculative, and can create market wide dynamics that are extremely dangerous, or otherwise can be outright fraudulent. The 2008 market crash was caused by insurance based derivatives, that were actually illegal under Glass Steigall. But Glass Steigal was repealed during the Monica Lewinski scandal. (probably as part of a deal with a Republican congress to avoid impeachment) Incidentally this dynamic will happen again, because Glass Steigall was never reinstated.
There aren't a lot of folks who understand SEC law. And 99% of journalists writing about this, don't have the faintest clue what they are talking about. Even worse a lot of them are just echoing professional astroturfing, which IS actually illegal when it comes to manipulating market shares. So most of the related articles, are written by unwitting dupes in a criminal conspiracy.
What is actually more interesting, is that if this goes to court, it will open up discovery for Musk. Which is to say he will have an opportunity, and legal basis for sussing out who the players are, and naming them and shaming them in front of a judge and jury. So if they want to sue him, go ahead. I'm sure he would just hate to be thrown in that briar patch. Who knows what charges will be levied after such a circumstance?
(Score: 0) by Anonymous Coward on Tuesday August 14 2018, @01:50AM (5 children)
What's with this new pattern of people posting multi paragraph responses that fail to answer the question or otherwise go on a tangent?
(Score: 0) by Anonymous Coward on Tuesday August 14 2018, @02:17AM (3 children)
'"derivatives" are standardized contracts. When you short, you buy the right to sell somebody elses stock, you're not actually selling stock you own.'
(Score: 0) by Anonymous Coward on Tuesday August 14 2018, @04:01AM (2 children)
You mean if I go to fidelity and short sell a stock I am "on derivatives markets"?
(Score: 0) by Anonymous Coward on Tuesday August 14 2018, @05:30PM (1 child)
Sometimes the nomenclature "short" is used to refer to just selling a stock you own. Which is different than selling a stock you don't own. If you short a stock you don't own, you are buying a contract, which is a derivative. Derivatives are sold on various markets just like stocks, and your broker will provide them mostly transparently. Typically the first time you do this, your broker will be pretty explicit about showing you the risks.
It is important to distinguish between them. When the big banks defrauded the world economy, the way they did it was buying derivatives into consumer mutual funds they managed. Essentially they pushed fraudulent unpayable insurance claims into unwitting consumers retirement portfolios without their knowledge or consent, and then crashed the insurer so the claims could never be paid. The money John Q. Public paid into their mutual funds went into bankers bonus's, and George W. Bush may as well have underwrote the whole thing, because the SEC never prosecuted most of them.
(Score: 0) by Anonymous Coward on Tuesday August 14 2018, @09:41PM
Wow still not talking about actually just selling short a stock. Not selling a stock, not options, not futures, just short selling. It seems you have no idea what you are talking about and just keep trying to push some political point.
(Score: 0) by Anonymous Coward on Tuesday August 14 2018, @03:37AM
Hey!...SN is now all AC---all the time. Any AC can say anything no matter if it is a real fact or an alternate fact. Me thinks we need a "nuke" mod. Blast the infringing IP back into the "Dark Web".
(Score: 1) by khallow on Tuesday August 14 2018, @09:50AM
The answer is in the word "derivative".
A derivative is a security with a value explicitly derived from other assets. Shorting is not a derivative as a result. It's simply selling stuff you don't have.
(Score: 0) by Anonymous Coward on Tuesday August 14 2018, @11:34AM
I can't believe this got upvoted to +5, its the level of fake news we expect from the MSM. The deep state bots were out in force yesterday.
(Score: 2, Interesting) by Anonymous Coward on Monday August 13 2018, @10:14PM
According to this, the SEC does regulate "shorters":
https://www.investopedia.com/terms/r/regsho.asp [investopedia.com]