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Elon Musk proves once again that the rules do not apply to him

2022-05-17T22:50:30.666Z

Elon Musk has shown once again that he will do things his way, announcing that his $44 billion deal to buy Twitter is on hold.



Why was the Twitter purchase deal paused?

What Elon Musk Says 0:52

New York (CNN Business) --

How do you regulate a man with a fortune exceeding $200 billion who thinks he knows more than everyone else?

The simple answer is: you don't.


Elon Musk has shown once again that he will do things his way, announcing on Friday that his $44 billion deal to buy Twitter is on hold.

The news came in the form of a tweet, rather than in a formal filing with the Securities and Exchange Commission (SEC).

The drama over the deal has continued in a series of tweets between Musk and the company.

  • Elon Musk says Twitter deal won't happen until dispute with bot accounts is resolved

Since the SEC ruled in 2013 that the use of Twitter and other social media platforms is an acceptable way for public companies to disclose material information, this could be one of the legal ways it has managed to get around the rules.

But many other Musk moves over the years have broken actual laws, not just skirted the rules, and yet none of this has slowed him down or changed his behavior.

The economic sanctions that regulators or business partners could put in place mean little to someone as wealthy as Musk.

He is clear proof that normal rules don't apply to the ultra-rich, if they choose to ignore them.

Case in point: Musk recently acquired nearly 10% of Twitter shares, without making the proper legal disclosure.

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An investor who buys 5% or more of a company's shares has 10 days to disclose their purchase, so that other investors can be made aware of what is affecting share prices.

Musk waited 21 days to make the disclosure, by which time he had completed the purchase of 9.6% of Twitter shares.

News of the acquisition sent Twitter stock skyrocketing even before he announced his offer to buy the platform and take it private.

If Musk had made the required disclosure on time, it probably would have cost him much more to accumulate the 15 million shares he bought after the 10-day window had passed.

The delay in filing saved Musk $143 million by keeping the stock price lower than it might have been while he continued to buy shares, estimates Daniel Taylor, an accounting professor at the University of Pennsylvania.

The Wall Street Journal reported last week that the SEC is investigating Musk's late disclosure of his involvement with Twitter.

"I think it could be laziness or the belief that the rules don't apply," Taylor said.

"But when you look at when the SEC mandates late filing, it's relatively rare. From a cost-benefit standpoint, it makes sense not to file. Even if the cost of late reporting is a fine $100,000 or a multi-million dollar fine, why wouldn't I [delay disclosure]?"

Musk's previous big battle with the SEC back in 2018, when he tweeted that he had "funding secured" to take Telsa public, driving up the stock, only added value to the billionaire.

Musk ended up paying a $20 million fine and resigned as Tesla chairman, though he kept the title of CEO, which the SEC had threatened to strip him of as well.

He also has to have tweets containing material information about Tesla approved by others at the company, but it's unclear to what extent he has met that requirement over the past four years.

Musk remains upset about the settlement he signed with the SEC, claiming he only did it because otherwise the banks could have cut off Tesla's funding and forced the automaker out of business.

But Taylor said the SEC's action amounted to little more than a slap on the wrist.

"They had an opportunity to send a strong signal and they chose not to," Taylor said.

  • Elon Musk Says Twitter Legal Team Told Him He Breached Nondisclosure Agreement

Other Rules Musk Overlooks

The stock ownership disclosure rules are just the latest in a long line of rules that Musk has flouted, with little or no consequence.

Traditional automakers issue recalls when they discover a flaw in a car's design or construction.

That's why the National Highway Traffic Safety Administration, the federal regulator, named the office that studies consumer complaints and crash data the Office of Defects Investigation.

But Tesla has been ordered to issue recalls for building its cars as planned.

Musk has complied with reviews, but has also attacked safety regulators for requiring his vehicles to be "less fun."

And Tesla hasn't had to pay significant costs for its actions.

Among the Tesla features that have prompted the recalls are the ability for front-seat passengers, and possibly drivers, to play video games on the touchscreen in the center of the dash while the car is in motion and that cars deliberately run stop signs when in self-driving mode.

  • Tesla calls for review 53,822 vehicles with the function of "full autonomous driving"

Musk has also fought with the Federal Aviation Administration over SpaceX rocket testing without the necessary permit.

In 2020, for example, the company conducted a brief test flight of its next rocket to Mars, called Starship, without providing the FAA with proper documentation or assessing risks to "public health and safety," according to the FAA. agency.

Even before the test flight took off, the FAA had denied a security waiver requested by SpaceX, but the company went ahead.

An FAA investigation was opened, but in the end SpaceX walked away with little more than "corrective action" orders.

During the early days of the pandemic, Musk reopened his Tesla factory in California that had been closed due to stay-at-home orders, which he called "fascist."

The county health department, which had ordered businesses to close to slow the spread of Covid-19, eventually gave in to its reopening plans.

-- Jackie Wattles of CNN Business contributed to this report.

Elon Musk

Source: cnnespanol

All news articles on 2022-05-17

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