Elon Musk and Tesla Might Not Have to Worry About the SEC
The hesitant, understaffed regulator may have a hard time applying its outdated rules to the founder’s tweets.
Elon Musk.
Photographer: Joshua Lott/Getty Images
Elon Musk’s tweet about taking Tesla Inc. private has brought intense scrutiny, mostly of Musk, but also of U.S. securities regulators. The Securities and Exchange Commission would seem to have a strong case that Musk was at the very least being misleading when he tweeted on Aug. 7 that he’d “secured” financing for a privatization deal. He appeared to indicate he hadn’t closed a deal in a subsequent blog post. That could be a violation of securities laws. Yet the probe is fraught with minefields.
Among them, ex-SEC officials say, is an understaffed and often outgunned enforcement team in San Francisco, which has a hard time competing for talent with top tech companies and law firms that offer big paydays. And the SEC has tread lightly at times when it comes to prominent tech executives. “There’s not quite as much trepidation about the SEC” in Silicon Valley, says Jonathan Macey, a professor at Yale Law School. Still, he says of Musk, “That doesn’t mean you can just say anything.”