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Last week, the Securities and Exchange Commission proposed to Elon Musk an agreement to remove the problems related to his tweet "on secure financing", and his lawyers announced that he would charge. Then he decided that he preferred not to do it and the SEC came back in the lead with a lawsuit that could have put him permanently safe from the management of the company.
In this segment of the MarchéFoolery podcast, host Chris Hill and lead analysts Taylor Muckerman and Jason Moser evoke the unsurprising news that has made Musk back off. But the deal he rejected last week was a little better than the one he had found himself with. However, fools actually see a positive aspect of one of the aspects of the case.
A full transcript follows the video.
This video was recorded on October 1, 2018.
Chris Hill: Move to You're here (NASDAQ: TSLA). I think it's important to define the context. The background is that last week there was an agreement between the SEC and Tesla. Tesla's lawyers reportedly told the SEC that "Elon Musk will sign this agreement." And he had a good night's sleep and woke up and said, "I do not sign this thing." And this led the SEC to sue them for fraud.
The deal would apparently be a fine for Elon Musk, a fine for Tesla, an obligation for Tesla to add two new independent directors to the board and a two-year bank on which Elon Musk would be chairman of the board. This is the contract that he rejected.
Over the weekend, he apparently saw the light because he accepted an agreement that essentially contained the same terms, except that the two-year ban is now a three-year ban. years imposing on him the presidency of the board of directors.
Jason Moser: I just like to think that Elon Musk is a Motley Fool Money auditor. I think we called this in this week's episode, is not it, Chris?
Hill: It was the main story.
Moser: We realized his reflex knee reaction and we said to ourselves: "Listen, he has more to lose, he will come back and take the measures that impose." There were too many reasons not to do it. He had too much to lose to stay there and try to make the most of this case, especially when one wonders where Tesla is today.
For me, it's interesting to see how many people have fun saying that Musk loses the role of president. As investors, we really like to see that. I do! I like to see this separation of powers.
I mean, if anything, it might give somebody some reason to counter Musk's somewhat impetuous nature. That is, unless they install a puppet. But I do not think that necessarily happens. I think that finally, it's a good thing.
If anything else, it shows that, as an individual investor as we are, there are forces at play that we can neither anticipate nor have effect. The market closed on Friday, the world was coming to an end. Before marketing, everything is fine in the world. We can not do anything to try to be part of that. That's why we're taking this business-centric approach of just saying, "Hey, we're going to try to find good companies that are changing the world with good leaders, and we're going to tie our tank to their stars, and just adopt the long-term approach there. " These are types of things over which we have no control, that we can not compete in this area.
Taylor Muckerman: It sounds like a slap on the wrist, even if it's out of the question of the presidency. I like it as a shareholder. I think they originally wanted to ban him from being a director or officer of a publicly traded company.
Hill: It was the trial. It was basically, "Here is this agreement, go ahead and make that agreement and you can leave it behind you." And he said, "No. And they said, "OK, now we're going to sue you for fraud, by the way, here's one of the penalties." If they had proven guilty of fraud, it was one of the problems they faced. I'm sure some people, whether it's senior executives or lawyers at Tesla, or big shareholders, have taken it apart and told him, "Hey, you think things are awkward right now Imagine this trial and spend the next two years And, by the way, if you lose, that's what you're watching. "
Muckerman: Yes, I think he brought in Mark Cuban's lawyer from his insider trading case. So maybe he had some influence: "I've already experienced this before, you may not want to test them."
Moser: Tesla is not 16% better today. It's not like everything is now fixed. It still has about the same challenges as Thursday and Friday of last week. This clears out some uncertainties. And it was a great uncertainty if he decided to sue.
Muckerman: And he continues to tweet Naughty by Nature's music videos at 4:00 am Monday morning, the day after all these breaks, and send emails to all employees Sunday to encourage them to close the month of September in style.
Hill: I want to go back to something you mentioned, Jason. I also find it interesting that there are people who describe this as a big loss for Elon Musk. Of course, he has to write a check for $ 20 million and Tesla has to do the same thing. But, let's just say, he just came out this morning and said, "I'm leaving my position as chairman of the board, I'm announcing that we're going to hire two new independent directors." And, oh, by the way, I realized I had tweeted too much on Twitter, and now my tweets will be re-read by people before they air. "We'd all applaud that! I am not a shareholder, I get up and applaud!
Moser: It's the difference between someone who volunteers to do something and is told to do it, right? I think there are a lot of people out there who, whether they are just Tesla bears or that they do not like the way Musk runs his business and communicates, they are happy to see that he is getting her ass for a round. But, again, you must love what this guy is trying to do, beyond cars. Few people can do what he is doing. So, I do not know, I am not an investor in Tesla, but I certainly support what he does.
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