Elon Musk once again proved he would do things his way, announcing on Friday that his $44 billion deal to buy Twitter was on hold. He shared this news in a tweet rather than an official filing with the Securities and Exchange Commission. The drama over the deal continued to unfold in a series of tweets between Musk and the company.
But many of Musk’s other moves over the years have broken the actual rules, not just bent the norm, but none of it has slowed him down or changed his behavior.
Any financial penalties that regulators or trading partners might put in place mean little to someone as wealthy as Musk. He walks, tweeting proof that the normal rules don’t apply to the ultra-rich if they choose to ignore them.
An example: Musk recently acquired nearly 10% of Twitter shares – without making the legally required timely public disclosure.
An investor who buys 5% or more of a company’s stock has 10 days to disclose the purchases, so other investors can be aware of what is affecting the stock price.
Musk waited 21 days to make the disclosure, by which time he had bought 9.6% of Twitter shares. News of the acquisition sent Twitter shares skyrocketing even before it announced its offer to buy the platform and take it private.
Had Musk made the required filing in a timely manner, it would likely have cost him significantly more to accrue the 15 million shares he purchased after the 10-day deadline.
The late disclosure saved Musk $143 million by keeping the stock price lower than it could have been as he continued to buy stocks, estimates Daniel Taylor, an accounting professor at the University of Pennsylvania.
the the wall street journal
reported last week that the SEC was investigating Musk’s late reports about his Twitter stake.
“I think it could be laziness or the belief that the rules don’t apply,” Taylor said. “But if you look at when the SEC enforces a late filing, it’s relatively rare. From a cost-benefit perspective, it makes sense not to file. Even if the cost of a late filing is a fine of $100,000 or a multi-million dollar fine, why wouldn’t he [delay filing]?”
Musk’s previous big battle with the SEC in 2018, when he tweeted that he had “Secure financing” to privatize Telsa
sending the shares higher, only emboldened the billionaire.
Musk finally paid a $20 million fine
and relinquished his position as Tesla chairman, though he retained the CEO title, which the SEC had also threatened to strip him of. He must also have tweets containing material information about Tesla approved by others at the company, but it is unclear how well he has complied with this requirement over the past four years.
Musk is still fuming over that deal he signed with the SEC, saying he only did it because the banks would have otherwise cut off Tesla’s funding and forced the automaker into bankruptcy. But Taylor said the SEC action amounted to little more than a slap on the wrist.
“They had an opportunity to send a strong signal and chose not to,” Taylor said.
Other rules Musk ignores
The stake disclosure regulations are just the latest in a long line of rules that Musk has flouted — with little to no consequences.
Traditional automakers issue recalls when they discover a flaw in the design or construction of a car. That’s why the National Highway Safety Administration, the federal regulator, named the office that reviews consumer complaints and crash data the Defect Investigation Bureau.
But Tesla has been ordered to issue recalls for building its cars exactly as planned. Musk complied, but also attacked safety regulators for forcing him to make his vehicles less “fun”. And Tesla suffered no significant cost for its actions.
Tesla features that have prompted recalls include allowing front-seat passengers — and possibly drivers — to play video games on the touchscreen in the middle of the dashboard while the car is in motion and to allow cars to drive deliberately through stop signs when in autonomous driving mode. .
Musk has also fought with the Federal Aviation Administration over SpaceX rocket testing without the required clearance. In 2020, for example, the company conducted a brief test flight of its next Mars rocket, called Starship, without providing the FAA with proper documentation or risk assessments for “public health and safety,” according to the report. ‘agency.
Even before the test flight took off, the FAA had denied a safety waiver requested by SpaceX. But the company still moved forward.
An FAA investigation ensued, but SpaceX ultimately came away with little more than “corrective action” orders.
At the start of the pandemic, Musk reopened his Tesla factory in California which had been closed due to stay-at-home orders he called “fascist”.
The county health department, which had ordered businesses closed to stem the spread of Covid-19, finally gave in to its reopening plans.
— Jackie Wattles of CNN Business contributed to this report