Activist investor shares theory on Elon Musk's eccentric behavior

Carla Harmon
October 6, 2018

The stock dropped as much as 3.8 per cent as of 9:40 a.m. Friday in NY, after Musk fired off more than a dozen tweets targeting the Securities and Exchange Commission and short sellers the night before.

"Just want to [sic] that the Shortseller Enrichment Commission is doing incredible work", wrote Musk, who has frequently blasted investors who bet against the company's share price rising.

Last Friday, Tesla's stock lost 14% of its value after the SEC sued Musk for securities fraud, claiming that statements he made on Twitter about having secured funding to take Tesla private at $420 a share were "reckless" and "misleading".

Shares of Tesla closed down 4.4% at $281.83, and fell another 2.2% after market hours following Musk's tweet.

The SEC filed a lawsuit on 27 September charging fraud and seeking to bar Musk from serving as an executive at any public company.

The settlement also required Tesla's board to implement procedures for reviewing Musk's communications with investors, which include tweets.

The SEC declined Business Insider's request for comment.

Among them was Nathan's colleague Jed Rakoff, who had objected to the SEC's decades-old policy of letting some corporate defendants settle without admitting or denying wrongdoing, as Musk did.

The SEC settlement still needs court approval. "Maybe a 420M fine would have been more appropriate?" one Twitter follower said.

Einhorn's assessment of the Tesla CEO's motives should be taken with a grain of salt, however - he and Musk have battled each other through Musk's tweets and Greenlight's investment letters. Despite burning through approximately $3.48 billion over the course of a year, Elon Musk hinted that Tesla may soon be profitable in recent emails to employees.

As the news on the settlement emerged at the weekend, he also told employees in an email that Palo Alto, California-based Tesla was "very close to achieving profitability".

Musk "doubled down" on the remark when another user on Twitter commented saying that Musk needs "a social team that can get attention without typos and without enraging the Shortseller Enrichment Committee". "It's only inviting the SEC to rethink the settlement. It's what they do", he said of the SEC.

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