Elon Musk Insults SEC After Settlement, Calls It Shortseller Enrichment Commission

Eileen GuzmanOct 07, 2018

Tesla shares slid 5 percent Friday morning a day after Musk mocked the SEC in late afternoon tweet, calling the agency the "Shortseller Enrichment Commission".

Elon Musk has posted a tweet about the "Shortseller Enrichment Commission" doing incredible work.

District Judge Alison Nathan in Manhattan ordered him and the SEC to explain by October 11 in a joint letter why their settlement was fair and reasonable and would not hurt the public interest.

On Monday, Elon Musk tweeted a Youtube link to the 1990s hip-hop video entitled O.P.P. captioned with "Naughty by Nature", the group behind the popular rap song.

Another reason for Tesla's decline on Friday is likely hedge fund manager David Einhorn's criticism of the automaker in his quarterly letter to investors.

CNBC's Jim Cramer sees Elon Musk 's tweet poking fun at the Securities and Exchange Commission as erratic and deeply concerning, and he warns that this brand of continued obstinance could put Tesla (TSLA) on a bleak path.

While some investors then came forward and confirmed that meetings had taken place in which Musk had raised the possibility of taking Tesla private, the message also caught the attention of SEC, which demanded an explanation.

Also as part of the settlements, Musk and the company will each pay a $20 million fine to the SEC. "The vast majority of settlements like this are approved by courts".

Greenlight is having a hard year, with its main fund down 25.7 percent through September, but said its Tesla short position was its second biggest victor in the third quarter.

Tesla said in its 3Q vehicle safety report that "we've registered one accident or crash-like event for every 3.34 million miles driven in which drivers had Autopilot engaged".

But regulators made a decision to balance the penalty for violating securities law with investors' fervor for Musk, who is Tesla's "animating force".

On August 7 Musk sparked a share frenzy after claiming he had "funding secured" to take Tesla private at $420 a share. They don't include any provision that would prohibit him from voting, as a director of Tesla, on its new chairman or its new directors.

"At the very the least, they can read the riot act to Musk's lawyer", said Stephen Crimmins, a former SEC enforcement lawyer who's now a partner at Murphy & McGovern.

Several sources also told the newspaper that Musk single-handedly prevented Tesla from reaching an earlier, more satisfactory settlement with the SEC.

Musk is believed to have experienced a change of heart after seeing Tesla's stock plunge the following morning.

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