[U] Tangent: All Things Musk -- This Stuff Presents So Many Novel Securities Law / Compliance Issues...

UPDATED; CORRECTED 11.11.21 -- I had relied on a mis-identified family photo, from a wedding, in ID-ing the sibling of Elon who sold last week. I regret the error; the corrected photo and identification, appears at right. End, update.

At another property I shepherd, I had resolved to just look the other way, but my commenters just won't let me... pretend, any longer.

This is... indeed awfully-fascinating. Like watching a train wreck -- in slow motion. Like watching a train wreck -- in slow motion. And we are waiting... on a slow news day -- so what the hey, right?

Elon Musk's weekend Twitter "poll" (about 60-40 in favor of him liquidating 10% of his stake -- like ~$20 billion in gains)... presents some truly novel securities questions, on both the policy, and the mechanical / legal / compliance fronts.

I won't try to cover the water-front, or even suggest answers for most of them. But I will note that his brother sister had, at end of last week, begun pulling the trigger on options (like his -- that will expire in 2022)... to the tune of around $100 million in gains so far. The first question there would be whether they are "affiliates" -- such that his her sales might be attributed to Elon. Note that she got out at much higher prices, before his ill-advised polling Tweets.

I do think his tweets did help his case, from an SEC enforcement perspective, since he did it over a weekend (closed markets) -- and he personally will see smaller gains due to the candid nature of the tweets. But thus far, he hasn't filed a Form 8-K, and this is clearly material. Shareholders not on Twitter are thus (as a matter of law) not aware of his choice to tank the stock. And the notion that he made poor planning decisions, about his own tax burdens (the price of Tesla stock has been effectively above $1,000 on and off for four years)... is really not much of an excuse.

As I said in comments, one solution, to protect the NASDAQ stock price (and the UN-affiliated shareholders' share prices) would be to take this one time hit, all at once, and then put him on a small cash salary -- with no new equity. He is afterall the richest man on Earth. And he says he works because it thrills him to solve problems.

And if he loses interest, because he has to pay Uncle Sam about half of what his gains are, all in... well, maybe the stockholders ought to... be prepared to... sell their Tesla.

But under all of this is (a very deep and I will say, cynical sense, of mine): the nagging notion that all he is trying to do... is impose his tax policy whims upon the nation's Congress -- and President... solely to drop his tax bill.

This is, I fear, at bottom -- all about his hatred of the so-called billionaire tax (that doesn't even exist yet). He's framing it in terms of his expiring options, and claiming it is somehow unfair that these stock options (paid in lieu of a cash salary all these years) are NOT ordinary compensation, subject to near 45% tax rates when California state taxes are included.

That is frankly... repulsive. When the ordinary salary earners (you and me!) pay those rates, he too should pay the full measure of his share, for agreeing to take non-cash comp, which has (fortunately) made him the planet's wealthiest single person.

[I do have a real solution for his tax worries, but I'll leave fully-fleshing that out, for another day here. His advisors are likely already exploring it -- and it preserves the company's value. If the board were, say tomorrow, to rip up his option packages, all of them -- and replace them with much longer dated ones, that incorporated a say 150% of today's market premium feature, and pay the taxes out of cash, for him -- this one time, he could effectively make this an estate planning tool. If, that is, if he is willing and able to keep working to meet company milestones -- all as set by the board (and not just making a pure cash grab here). And it would very likely save the company lots in stock dilution, and NADSAQ price declines. At a minimum, it would flush out whether he really is being genuine about wanting to improve the fortunes of his public shareholders. But more on that, when I have more time to show examples of what I'd do.]

I'll have more in the coming days, but for now it is fair to say (despite all the press coverage of it)... he and his sister have ALREADY traded on inside information, to the detriment of unaffiliated shareholders all while he knew he was going to try this stunt on Twitter.

But that is no cure for wholly un-filed SEC Forms 8-K. He better get those on file by 10:30 Eastern this evening.

Finally, I am now certain this is no trolling effort. I had earlier thought he was just f-ing around, because I had lost track of how soon his some $35 billion in stock options expire.

Nah -- he's gonna' sell. That you may count on (absent a board repricing, and extension, as set out above).

And then, the sales will create the kind of chaos only (it would seem) Musk (and Tangerine) can regularly create.

Stay tuned.

नमस्ते