This morning, NPR reporters raise the provocative notion that perhaps, just perhaps. . . the world's richest man. . . cannot be regulated. He can tie the agency up in endless appeals, and effectively keep violating the market integrity laws. . . for a decade.
I think that's a little overwrought, as he is now a serial pattern fraudster -- and they can ban him for a period, or for life -- from running public companies, under clearly constitutional federal law, stretching back nearly 80 years, now.
The more salient question (I think) is whether the agency is ready to deal with the whirlwind (collateral sector rotation moves, primarily) in the stock markets. . . such a ban -- even for just two years -- would create in stocks -- like Tesla and Twitter.
Though I do think Musk will voluntarily walk away from Twitter -- so it is really "only" Tesla, and its affiliates, its supply chain and the SpaceX federal government contracts, we are talking about here. But that whole entangled ball is. . . nearly a trillion in economic effects. So, we shall see -- here's the very good angle, from NPR -- do go read it all:
. . ."We [at the SEC] have blunt tools in the securities laws that are designed to penalize fraud," Fagel says. "But if somebody sends a poop emoji and investors decide that they are going to buy or sell stock on that, the securities laws aren't really designed to protect them at that point."
That particular tweet didn't lead to a dramatic move in Twitter's stock price, but several of Musk's other tweets have, including one in which he declared his deal for the company was "temporarily on hold."
Musk seems to have figured out something, Fagel says. In this new world, using the social media platform that Musk is trying to buy, you can mess with markets and it "doesn't really rise to the level of fraud."
Sure, that can hurt investors, but under current law, the SEC can't do much. . . .
I for one am pretty certain the SEC will take resolute action to curtail his involvement in public companies outside of Tesla (that ship sailed). A "tailored" remedy that allows Tesla investors to orderly exit if they wish, with his wallet being the buyer. . . coupled to an order preventing him from closing the Twitter deal (though I think he's quitting it, on his own), might do the trick.
Finally, an order preventing him from owning more than one percent of any public company for at least five years. . . would be immensely helpful, for market integrity. Onward, smiling -- this afternoon to see the Maverick guilty pleasure, in theaters!
नमस्ते
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