Can the Securities and Exchange Commission take on the richest man on the planet?

Elon Musk threw insults, belittled the Securities and Exchange Commission, and even expressed complete contempt for the chief cop on Wall Street.

Musk called the Securities and Exchange Commission at a recent conference. he is chirp A saucy tip in 2020. “I disrespect the Securities and Exchange Commission,” he said in a 2018 interview. After Musk amassed a large stake on Twitter this year, Musk filed the required paperwork 11 days later.

“You know, Elon Musk basically says, ‘Come to me. I dare you,'” says Kristen Chung, a professor at Albany Law School. She used to be a lawyer in the enforcement department of the SEC.

Musk continues to provoke the Securities and Exchange Commission even though the agency has taken multiple actions against him, from being fined millions of dollars to being charged with securities fraud. In a recent letter, the Securities and Exchange Commission asked Musk to detail public comments he made about Twitter and also explain why it did not provide a mandatory disclosure on time.

All of this reignites the debate over whether the Securities and Exchange Commission has enough sharp teeth to rein in powerful and wealthy CEOs like Musk.

Late submission is the “slam dunk case” against Musk

Musk’s recent behavior has raised eyebrows. Joseph Grundvist, a former Securities and Exchange Commission commissioner, says it seems clear that Musk broke the law with this late filing. When someone raises more than 5% of a public company’s stock, the person has 10 days to tell the Securities and Exchange Commission, but Musk took his time.

“In practical terms, this seems to me as close to a slam dunk case as you will find out,” says Grundvist, who is now a professor at Stanford Law School. “Your junior attorney at the SEC should be able to write a very powerful complaint.”

But Grundfest is not convinced that accusing Musk of breach of disclosure would do much. This crime is usually punishable by a fine of about $100,000.

“For a guy like Elon Musk, that’s pocket hair,” says Grundfest. “That’s a small change. It’s bupkis. You can take it out of petty cash.”

Musk, who is the richest person in the world, has an estimated net worth of $227 billion, according to the Bloomberg Billionaires Index.

It wouldn’t really make a difference,” Grundfest adds. “He won’t change behaviour. He’ll laugh.”

Elon Musk, who has offered to buy Twitter for $44 billion, has more than 96 million followers on the social media platform.

Chris Delmas/AFP via Getty Images

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AFP via Getty Images

Elon Musk, who has offered to buy Twitter for $44 billion, has more than 96 million followers on the social media platform.

The 60 minutes An interview with Musk

In 2018, Musk laughed at the SEC at a 60 minutes An interview with reporter Leslie Stahl, who asked the Tesla CEO about his decision to settle with the agency over the tweet.

“I want to be clear,” Musk said in the interview. “I don’t respect the SEC. I don’t respect them.”

The Securities and Exchange Commission (SEC) sued him for sending “misleading tweets” that “led to significant market turmoil.” Most famously, Musk tweeted that he was “considering taking a $420 Tesla.” He claimed to have secured “secured financing” to do so. The SEC claimed he did not.

Musk and Tesla agreed to pay $20 million each, and the electric car maker agreed to “establish additional controls and procedures to oversee Musk’s communications,” including his tweets, according to a press release from the SEC.

However, this type of quantization did not work. Musk has continued to publicly hurt the Securities and Exchange Commission, and recently asked the court to get rid of his settlement. In April, a federal judge refused.

Millions versus billions and trillions

Former SEC officials question whether the agency is equipped to monitor a world where companies are worth trillions, where the wealth of the world’s richest runs into the hundreds of billions and where tweets drive stock market moves.

Congress created the Securities and Exchange Commission nearly a century ago after many Americans lost money in the 1929 stock market crash. The SEC’s primary mission is to “protect investors,” according to its website.

It was supposed to be a powerful organization – a regulatory body and a law enforcement agency. But in the face of market manipulation and other irregularities, his options are limited. For example, she cannot bring criminal charges.

Congress created the Securities and Exchange Commission after the 1929 stock market crash, when many people lost their money.  Its primary mission is

Saul Loeb / AFP via Getty Images

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AFP via Getty Images

Congress created the Securities and Exchange Commission after the 1929 stock market crash, when many people lost their money. Its primary mission is to “protect investors,” according to its website.

It’s worth asking, Chung says: Is the Securities and Exchange Commission (SEC) “executing its mission in a fair and equitable manner, no matter how wealthy and powerful you are?”

For example, in the aftermath of the 2008-2009 financial crisis, many Americans questioned why no CEO has been prosecuted. And although financial institutions were forced to pay civil fines, those penalties were bank expenses for banks with trillions of dollars in assets.

“If people feel that markets are rigged, or that markets are fundamentally unfair, and that your wealth and power can dictate what happens to you, they may be less confident in what the market tells us about the value of companies like Twitter,” Chung argues.

And when it comes to resources, there is a wide gap between the SEC, the executives and the organizations that regulate them. To put this in perspective, Musk’s net worth is more than 100 times the annual budget of the Securities and Exchange Commission.

“The SEC is kind of driving its Model T, when everyone is there in their sports cars,” Chung says.

poo emoji

Even if the Securities and Exchange Commission (SEC) does not indict Musk, the Tesla CEO is pushing the boundaries and testing standards in a way we’ve never seen before, according to attorney Mark Wagel, who used to run the regional office in San Francisco.

Highlights of a recent Twitter exchange between Musk and Twitter CEO Parag Agrawal.

What started as a substantive exchange about how the social media company accounts for its users ended with the posting of a poo-mask emoji.

“We have blunt tools in securities laws designed to punish fraud,” Fagel says. “But if someone sends in a poo emoji and investors decide they’re going to buy or sell stock on that, the securities laws aren’t really designed to protect them at that point.”

This particular tweet didn’t lead to a drastic move in Twitter’s stock price, but several of Musk’s other tweets, including one in which he declared his deal to the company is “temporarily on hold.”

It looks like Musk has figured out something, says Vagel. In this new world, using the social media platform that Musk is trying to buy, you can tamper with the markets and it “doesn’t really amount to a scam.”

Sure, that could hurt investors, but under current law, the SEC can’t do much.

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