Many lessons cover what to do but some of the most valuable lessons to learn cover what not to do. Elon Musk – CEO and founder of companies such as Tesla and SpaceX – recently provided one of those lessons by allowing his flair for self-promotion to get him in hot water with the Securities and Exchange Commission (SEC).
Musk’s trouble began on August 7 of this year when he tweeted “Am considering taking Tesla private for $420 a share. Funding secured.” His tweet caused Tesla stock to spike, rising nearly 11 percent by the end of trading that day. The SEC filed a complaint stating that the CEO had not confirmed terms of any deal, including price or funding source. (Source: “SEC Sues Tesla CEO Elon Musk”, NPR).
The complaint from the SEC eventually cost Musk $20 million and his position as Chairman of Tesla. He reached a settlement with the SEC on September 29. Tesla was also subjected to a fine of $20 million as part of a company settlement with the SEC. (Source: “Elon Musk Steps Down as Chairman in Deal With S.E.C. Over Tweet About Tesla“, The New York Times.
Learn From Elon: Assume The SEC Is Watching And Listening
Manipulating the price of stock shares via marketing or public relations is not something the SEC takes lightly. Whether you are discussing company information on social media or spreading misleading information among your investor colleagues, you run the risk of being on the wrong end of legal action from the SEC.
If you find yourself in that unfortunate position, it is imperative to have a proven defense firm on your side. Ford O’Brien Landy LLP has helped many individuals and companies protect themselves against SEC complaints.
