Tesla Is Facing U.S. Criminal Probe Over Elon Musk Statements
Tesla Inc. is under investigation by the Justice Department over public statements made by the company and Chief Executive Officer Elon Musk, according to two people familiar with the matter. The criminal probe is running alongside a previously reported civil inquiry by securities regulators.
Federal prosecutors opened a fraud investigation after Musk tweeted last month that he was contemplating taking Tesla private and had "funding secured" for the deal, said the people, who were granted anonymity to discuss a confidential criminal probe. The tweet initially sent the company's shares higher.
[...] The criminal inquiry is in its early stages, one of the people familiar with the matter said. Justice Department probes, like the civil inquiries undertaken by the SEC, can take months. They sometimes end with prosecutors deciding against bringing any charges.
Also at MarketWatch.
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Elon Musk Reaches Settlement in SEC Tweet Battle:
Elon Musk has reached a deal with the Securities and Exchange Commission, the two parties said in a legal filing on Friday. The new agreement provides much more detailed guidance about when tweets and other public statements by Musk must be approved by Tesla lawyers.
Musk's original deal with the SEC was announced last September. It required Musk to obtain pre-approval for tweets that "contain or could contain" information that's material—legal jargon for information that's significant to shareholders. While the SEC expected Musk to begin regularly clearing tweets with lawyers, Musk interpreted this language as giving him significant discretion to decide for himself which tweets contained material information. As a result, he didn't seek legal review for any tweets in the first few months the agreement was in effect.
[...]Under the new rules, Musk must get a Tesla securities lawyer's sign off on tweets (and other communications) regarding Tesla's finances, its production and delivery numbers, new lines of business, sales projections, proposed mergers, fundraising efforts, regulatory decisions, and several other types of information.
The SEC says that if the judge signs off on these new terms, the SEC will drop its request for Musk to be held in contempt. In other words, the SEC seems to be satisfied with getting Musk to start seeking legal review for his tweets the way the agency thought Musk had been doing since last time. The SEC is not seeking to punish Musk further for his February tweet.
Given how well Elon Musk followed the intent of the prior ruling, I wonder how closely he will follow this ruling?
Previously:
Funding for Tesla to Go Private Could Come From Saudis; Lawsuits and SEC Scrutiny Increase
SEC Reportedly Subpoenas Tesla Over Take-Private Tweet
Tesla Facing Criminal Probe
Elon Musk Accused by SEC of Misleading Investors in August Tweet
SEC Settlement: Elon Musk Resigns as Chairman of Tesla, Stays as CEO, $40 Million in Fines Paid
Elon Musk Isn’t on His Twitter Leash Yet, So He’s Taunting the SEC
Tesla has yet another federal headache to contend with. On March 4, the National Highway Traffic Safety Administration's Office of Defects Investigation opened a preliminary investigation after two reports of Tesla Model Y steering wheels detaching in drivers' hands while driving.
NHTSA's ODI says that in both cases, the model year 2023 Model Ys each required repairs on the production line that involved removing their steering wheels. The wheels were refitted but were only held in place by friction—Tesla workers never replaced the retaining bolt that affixes the steering wheel to the steering column. In 2018, Ford had to recall more than 1.3 million vehicles after an incorrectly sized bolt resulted in a similar problem.
The ODI document states that "sudden separation occurred when the force exerted on the steering wheel overcame the resistance of the friction fit while the vehicles were in motion" and that both incidents occurred while the electric vehicles still had low mileage.
Related:
Tesla recalls all cars with FSD (full self driving) option (Elon Tweet:"Definitely. The word "recall" for an over-the-air software update is anachronistic and just flat wrong!")
Feds Open Criminal Investigation Into Tesla Autopilot Claims
NHTSA Investigation Into Telsa Autopilot Intensifies
Tesla's Radar-less Cars Investigated by NHTSA After Complaints Spike
Tesla Under Federal Investigation Over Video Games That Drivers Can Play
Tesla Must Tell NHTSA How Autopilot Sees Emergency Vehicles
NHTSA Opens Investigation into Tesla Autopilot after Crashes with Parked Emergency Vehicles
Tesla Recall is Due to Failing Flash Memory
Tesla Crash Likely Caused by Video Game Distraction
Autopilot Was Engaged In The Crash Of A Tesla Model S Into A Firetruck In LA, NTSB Says
Tesla to Update Battery Software after Recent Car Fires
Tesla Facing Criminal Probe
Former Tesla Employee's Lawyer Claims His Client Was Effectively "SWATted"
NHTSA Finishes Investigation, Declares Tesla Has No Fault in Deadly Crash
Tesla Says Autopilot System Not to Blame for Dutch Crash
(Score: 2) by MichaelDavidCrawford on Wednesday September 19 2018, @03:17AM (2 children)
The board directors as well as the officers have a corporation have certain Fiduciary Duties. Among them is that they must ensure that the corporation pays its taxes; failure to do so and the IRS and the state tax people will "Pierce The Corporate Veil" by extracting the arrears from the personal money of the fiduciaries.
I expect that among the fiduciary duties is that one must take care not to make false statements that could move the stock price. Even if Elon didn't profit by saying that about going private, a whole bunch of other people did.
The way Elon... uh.. "shots from the hip" must be regarded by stock speculators as The Goose That Laid Golden Eggs.
Yes I Have No Bananas. [gofundme.com]
(Score: 3, Informative) by Anonymous Coward on Wednesday September 19 2018, @02:50PM (1 child)
First, since your a programmer you should have the linguistic chops to know that what you just said, is a statistical impossibility. If you don't you're a shitty programmer. Second fiduciary responsiblity is to the stockholder, not to people who buy contracts from third parties. Third, that responsibility is to make the stock price go UP. Which is to say that his fiduciary responsibility is to bust the shorts. Fourth, the guy is an engineer, not an accountant or a lawyer, and the traders have a due dilligence responsibility themselves to consider that. Fifth it is not the first time he made reference to the intent to take the company private.
What we haven't seen yet, is whether any of the brokers who were involved with the chop shop scheme to crash Tesla stock were in fact, also brokers for members of the DOJ, congress, et al. More to the point, we haven't seen anybody actually investigate the extraordinary coordination of all the astroturfing that was part of the scheme to crash Tesla stock.
Musks fiduciary responsibility is to defend and advance the capital interests of the stockholders. The DOJs involvement in this case, would be as attorney in the defense of corporate raiders and mobbed up brokerage chop shops. Not that everybody didn't already know that.
Well, every but you apparently.
(Score: 0) by Anonymous Coward on Wednesday September 19 2018, @05:40PM
You speak very forcefully and confidently about things you apparently know fuck-all about. THERE IS NO CORPORATE FIDUCIARY RESPONSIBILITY TO THE SHAREHOLDER or anyone else for that matter. There are way too many of you armchair corporate lawyers who parrot this all the time, but you are WRONG. You can find a bajillion references for this, but maybe you can start here [medium.com]. So your second and third points are just plain wrong. Your fourth is an excuse, and a pretty bad one at that where the courts will gladly toss you on your ass if you're just claiming ignorance, particularly after being CEO or the head of multiple companies, both public and private, for how many years now? And your fifth is especially horrible ("Well, I didn't get arrested the last time I robbed someone, so I figured it must be ok").
So, no, fucktard, go back to picking up your legal strategy from the backs of cereal boxes.
(Score: 2, Interesting) by Anonymous Coward on Wednesday September 19 2018, @03:43AM (21 children)
Just another anti-tesla hit piece.
Move along.
(Score: 0) by Anonymous Coward on Wednesday September 19 2018, @05:00AM (20 children)
I'm not sure how this is interesting. Musk broke the law and is being investigated. Even if you ignore the fact that they broke the law, the company is likely going to go bankrupt as the SEC won't allow them to borrow anymore money while under investigation.
What's more, they've got far too many employees for the number of cars they're shipping to break even, let alone make a profit.
Face it, Tesla is a poorly run company that's going to be going out of business in the relative near future. Just waiting for the upcoming recession for the coup de grace
(Score: 0) by Anonymous Coward on Wednesday September 19 2018, @05:52AM (2 children)
If they do go out of business, do I get all my karma points back that I lost years ago predicting that they would?
I'm not anti tesla (or ev), it's that I've studied the market for 40 years and own an electric car.
(Score: 1, Touché) by Anonymous Coward on Wednesday September 19 2018, @02:52PM
No you just get to be a douche by gloating over a lot of people loosing their jobs.
(Score: 2) by bob_super on Wednesday September 19 2018, @09:37PM
They will not go out of business. Too many assets worth buying.
The primary question is who would buy them if it came to that.
(Score: 1) by Sulla on Wednesday September 19 2018, @06:21AM
Wonder how many SEC members hold boeing stock.
Ceterum censeo Sinae esse delendam
(Score: 0) by Anonymous Coward on Wednesday September 19 2018, @09:49AM (11 children)
Traditional competitors are already producing EV [arstechnica.com] and hybrid vehicles, it's a safe bet they'll not be experiencing Tesla level production problems.
(Score: 1, Informative) by Anonymous Coward on Wednesday September 19 2018, @09:57AM
Tesla is toast [volkswagenag.com]
(Score: 2) by ledow on Wednesday September 19 2018, @10:16AM (9 children)
The other competitors let Tesla do their R&D and test the market for them. It worked - for 15 years they barely had to do anything.
Now that there is a market, they can literally drop more money than Tesla has ever received into it, each of them, and take the entire market out from under them, just by having their name on it.
They've known that all along, and it was just a competitor wasting investor's money and barely making a dint. Now that they have had 15 years of that done for them, and in some cases nearly a century of tooling, design and manufacturing, and the money to churn out vehicles en masse that Tesla has never hoped to be able to match, they can sit up, sign off the things they've had in R&D for more than a decade and take all the sales.
I ran the numbers a while back but from memory, every car Tesla has ever made doesn't approach the output of the Ford UK company in one year. It may even have been one month. But certainly one year. And Ford does not operate exclusively in the UK (hell, it barely has any manufacturing there at all any more).
Tesla were used as a guinea pig, to burn through their investment, learn what the market would pay for, wait until that was actually profitable (Tesla still is not, but maybe a mass manufacturer have worked out that THEY could be now), and then either buy the name or patents, or put out a competing model that they push.
Honestly, apart from hybrids, what advertising do the big manufacturers even do for electric cars? Virtually zero. If they were serious, they could have been advertisement and competing for market share all this time. You'll know electric cars are successful when they do. And they are starting to. And probably their marketing budget alone will swamp anything Tesla have ever spent on building their cars, let alone anything else.
All of Musk's ventures are the same. Throw money at the problem, while never really making a profit. Any fool can burn through billions and do things that other people can't/won't for the same price. But it has a limited timescale. When it gets to the realms of actually being profitable, then the big players could snap up everything overnight and turn that into a REAL profit.
Sure, SpaceX provides people with a REALLY CHEAP way to launch a satellite... because they're burning their own money (but they do make a small profit on launches, whether that translates to a long-term sustainable profit is another matter entirely). If someone said "Hey, here's a car that Ford can't afford to make because it makes no profit, but I'll give it to you at a cut-down price", of course you'll have customers. Until the day you run out of money. And of course nobody else will follow that model.
But when it does becomes profitable, you'll be the bottom of the pile below all the others that didn't waste billions on unnecessary things while the market was unsustainable.
Tesla's name will be forgotten entirely soon enough.
(Score: 3, Touché) by Anonymous Coward on Wednesday September 19 2018, @11:50AM
No, Tesla's name will be remembered for quite a long time. What people will forget, however, is that his name was used also as the name of a company making electric cars.
(Score: 0) by Anonymous Coward on Wednesday September 19 2018, @05:21PM
The first to market advantage requires you either corner the market (brand recognition) or have enough assets (IP etc) to make your company an essential acquisition target. Tesla attained neither, they're Toast [cnbc.com]
One born every minute. We have to give Elon props for SpaceX but the hyperloop scam needs shutting down.
(Score: 2) by suburbanitemediocrity on Wednesday September 19 2018, @07:05PM
Sounds like a smart business stratedgy.
See also second mover advantage. https://en.wikipedia.org/wiki/First-mover_advantage#Second-mover_advantage [wikipedia.org]
(Score: 0) by Anonymous Coward on Wednesday September 19 2018, @07:56PM (4 children)
You're just here to write a novel about Musk, bashing him and his ventures. You claim he never makes a profit, except SpaceX has been for years. Tesla would have been had they not been re-investing (you obstinately ignore Amazon which has spent a long time in a similar state).
He's not perfect, nor are the companies he represents... but they've together accomplished far more than most companies ever do. They've all driven their respective industries to improve. You also forget that SpaceX SAVES NASA billions. Heck, if I have to list out everything you're blatantly ignoring to prove your own belief it'd be massive, but you're also ignoring that it's been proven by more than 4 tear-downs by 4 different entities, that they make a sizable profit on each Model 3. They also sold the most cars in the luxury market, but you're ignoring that too.
Nevermind, I'm wasting my time. You made up your mind a long time ago and will not re-evaluate because it's now who you are.
(Score: 2) by ledow on Wednesday September 19 2018, @09:07PM (3 children)
Sigh.
1) SpaceX's profit is opaque, and certainly not healthy at all. https://www.fool.com/investing/2017/11/11/will-spacex-earn-a-profit-in-2017.aspx [fool.com] but I don't claim it's a creditable source (however I cannot FIND a creditable source), and they have reported losses in recent years and there's no actual proof they ever made a profit. Certainly not enough to shout, or to avoid having to have investors dump hundreds of millions on it constantly.
2) Amazon founded in 1994. Didn't profit until 2001 (7 years, ahead of a specific plan to not profit for 5). SpaceX founded in 2002. Unknown if it actually makes a profit in those 16 years. Telsa founded in 2003. Yet to make a profit in 15 years. P.S. Just because "Amazon did it 8 years before" isn't a business plan. Any number of companies didn't profit for 7 years and then tanked.
3) SpaceX hasn't driven anyone to improve. NASA and other places just pay them to launch. And take the blame when things blow up. They are a liability sink. A very, very, very cheap one because they probably don't profit. The technology is not substantially different and the bits that are are dodgy (like trying to land the things upright, which resulted in a number of documented-but-not-well-reported accidents including the landing ships being obliterated in the process). Tesla cars are just electric cars. The battery are industry standard batteries made en-masse. The "AI" is... the same as everyone else's. Crap. If anything, like I say, they let SpaceX/Tesla take the hit with their billions in investment and "no need" to account for where the money goes and cherry-pick what works. So far... nobody's cherry-picked a damn thing.
4) Teardowns don't tell the story... Apple devices aren't worth shit in component costs, but they sell for a fortune. And Apple make a fortune. Tesla aren't making a profit. At best, they're getting 20% on the models they make (I can't find a single number much better than that). And they are sinking their money they do make into manufacturing that... well... every big car company already out-ranks by probably an order of magnitude. Tesla barely make enough cars to even figure on the charts, everywhere I look. They are small fry. And it's taking every penny they have to get close to production numbers that the big companies can roll out this year at the push of a button. Ford et al are each selling MILLIONS OF CARS PER QUARTER. Tesla don't even figure.
I made up my mind long ago that Musk is exactly what he appears - an eccentric billionaire with pie-in-the-sky dreams who sets up toy companies for things that sound cool. For which none of them make a profit worth shouting about, are all bouyed up by investment (mainly his) and which investment he doesn't understand the rules of (hence being investigated by the SEC). When he dies / runs out of money, those companies tank.
If I was a billionaire, I'd do the same, for my own entertainment. What I wouldn't do is claim it's anything other than that.
(Score: 1) by khallow on Thursday September 20 2018, @02:01AM (2 children)
Counterexamples: Russian and Chinese space programs, Blue Origin, ULA, Arianespace, etc. Anyone who launches rockets is now feeling the pressure to do better.
(Score: 2) by ledow on Thursday September 20 2018, @07:35AM (1 child)
Though the make-up of spaceflights have changed, because SpaceX are launching things and didn't exist pre-2003, correlation is not causation.
For instance, Russian flights have gone from being the most numerous to almost nothing since 2000-ish. Literally bottomed out. They aren't competing and there are issues with how much they want to do stuff with the ISS.
China has ramped up, but is that because of SpaceX or because of Russia bowing out? You're attributing one drop and one boom country to SpaceX's existence with the same reasoning for both.
You can't attribute anything to SpaceX's existence that can't be attributed to a million other factors.
https://space.skyrocket.de/directories/chronology.htm [skyrocket.de]
Even in 2017 (the last full year of stats), SpaceX basically is doing a handful of Iridium's. In terms of actual payloads, nothing compared to the other countries.
Of course they are there are they are appearing on the stats and they are doing launches. But everyone else is just business-as-normal in comparison.
They are "just another competitor".
(Score: 1) by khallow on Friday September 21 2018, @05:17AM
While that is true, you would mostly wrong to do so. SpaceX does more than merely exist. It also offers the cheapest, reliable flights to space for a significant range of payloads. And while a million factors don't depend on relative cheapness, price remains one of the biggest deciding factors for who gets the customers. So we have a clear means of causation for how SpaceX affects everyone who launches rockets and needs to occasionally attract paying customers.
Even if we ignore that it's true, what's the problem? There's no contradiction here. Russia's and China's programs are different launch providers with different characteristics. There is no reason to expect them to react identically to factors in the industry.
Then you haven't been paying attention. SpaceX went from 8 launches in 2016 to 18 launches in 2017 (completely dominating the US commercial launch market BTW with 17 of 22 launches) and 15 launches so far this year in 2018. What's going on is that in a few short years, they took a large share of the launch market.
When one looks at the global industry [wikipedia.org], there were 83 successful orbital launches of any sort in 2017, including government programs. More than 20% of those launches came from SpaceX. 25 successful launches [wikipedia.org] came from China which suddenly decided to massively increase its launch tempo to 40 launches [gbtimes.com] this year (35 from the government launcher and several private launch attempts).
So not only is SpaceX doing a large number of launches now, it's doing enough that the current leader, China is greatly increasing the launch frequency of its own programs in order to stay ahead. This is just one example of how it's changing the industry.
(Score: 0) by Anonymous Coward on Wednesday September 19 2018, @10:16PM
I don't think that Musk ever cared about making cars. He wanted to make batteries and supply other electric car companies, that's where the real money is (dealing with the public and individual customers is a royal pita). If you accept this premise, then the Gigafactory (lithium batteries) makes more sense. Tesla cars exist to consume the early production of the battery factory, until other car companies catch up with their electric car production.
Tesla car buyers will (some years from now) be left high and dry with no factory service, after Tesla goes belly up. Luckily electric car drivetrains tend to be pretty reliable, so it may be a soft landing for the car customers?
(Score: 3, Interesting) by khallow on Wednesday September 19 2018, @11:32AM
Allegedly.
I doubt the SEC would have a case for that. Musk's statements are irrelevant to the company's ability to borrow and repay its debts. A minor case like this doesn't give government regulators unlimited authority to shut down a company.
Sounds like we're going through the laundry list again.
(Score: 0) by Anonymous Coward on Wednesday September 19 2018, @03:13PM (2 children)
"Musk broke the law and is being investigated"
Did he? Which one?
"they've got far too many employees for the number of cars they're shipping to break even"
By comparison to what?
Tesla's profit models are different than the big 3. They have to carry more of the verticle market weight. The thing is that the verticle market products, have profit models of their own. Which is to say that if your comparing Tesla to the big 3, you are making an apples to oranges comparison.
It is also worth noting that steel tarriffs are going to effect the big 3 more than Tesla. Tesla's are mostly cold layup carbon composite. Everything the big 3 make is steel. It is going to take at least 5 years for the mills to refit and renovate to make up for the increased supply cost in steel alone.
Detroit has its own problems right now. The last time GM decided to try and muscle the electric car market into oblivion, it spent millions, ended up crushing every electric car it built, and then went bankrupt. And that time, it didn't even have a competitor!
The only advantage the big 3 has here, is that they've corupted half of congress. Which in and of itself, is a reason to back Musk.
(Score: 2) by bob_super on Wednesday September 19 2018, @09:43PM
> "Musk broke the law and is being investigated"
> Did he? Which one?
"thou shalt not piss of deep-pocketed highly-connected people"
(Score: 0) by Anonymous Coward on Wednesday September 19 2018, @10:32PM
> Tesla's are mostly cold layup carbon composite.
Ding! Wrong. Carbon fiber composite (even the fastest processes available) are too slow to make cars in medium/high volume. A few of the traditional car companies are working on getting the cycle times down and are using more carbon composite in their lower volume cars. You might be confusing with exotics made in very low volume like McLaren sports cars?
Tesla Model S and X are mostly aluminum stampings, similar to some Audi and Jaguar models (to name a couple). Model 3 body is steel stampings. Part of the startup problem with Model 3 was getting their process onboard to deal with steel, which responds differently to stamping than aluminum.
(Score: 0) by Anonymous Coward on Wednesday September 19 2018, @10:17PM
I'm sure they'll get along great in prison.