In an ironic turn of events, Tesla CEO Elon Musk ends up making millions of dollars from his SEC settlement over his “funding secured” tweet.
Tesla ‘Funding Secured’ Tweet and SEC Lawsuit
A quick reminder for those who forgot or don’t know about the situation.
Back in 2018, the SEC filed a lawsuit against Elon Musk over his infamous “funding secured” comment regarding his failed attempt to take Tesla private.
The Security and Exchange Commission (SEC) judged that Musk exaggerated when saying that the funding was “secured”:
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Tesla and Musk ended up reaching a settlement with the SEC.
As part of the settlement, Musk agreed to step down from the role of Chairman of the board and both Tesla and Musk had to each pay $20 million fines.
The CEO presumably didn’t want Tesla to have to pay for his issue with the SEC and while he couldn’t directly pay for Tesla’s part of the fine, he decided to buy $20 million worth of shares from Tesla.
That way, he sort of indirectly ended up paying for Tesla’s fine – though he also ended up with ~71,000 additional Tesla shares in the process.
Musk has the Last Laugh
Now fast forward two years later and Tesla’s stock is on a tear that makes the $420 take-private price sound like a joke.
Yesterday, Tesla’s stock closed at $1,371 per share.
At yesterday’s close, Musk’s $20 million worth of Tesla shares that he bought to ‘unofficially’ pay off Tesla’s part of the SEC fine is now worth over $97 million (Thanks to Tyler Hillard for pointing this out to me).
It means that after his own fine, Musk ended up making over $50 million from the SEC settlement.
Over the last few days, the CEO has been taunting the SEC, which he calls the Short Enrichment Commission, and even said that he plans to send the agency Tesla’s new short shorts – a product that solely exists to taunt people betting against Tesla.
Forget the short shorts, this is really dunking on the SEC – actually making money from their settlement.
To be honest, while I get Elon’s frustration, I also don’t blame the SEC in this matter.
Personally, I wouldn’t have gone after Elon over the tweet because I don’t think he was doing it maliciously, but I think the SEC was also technically right that the funding wasn’t exactly secured at $420.
Though in hindsight, that would have been a great deal for anyone.
In short, I would argue that SEC resources would have been better spent going after truly malicious market manipulators.
But at the end of the day, they got a win and Elon got a slap on the wrist and $50 million more in equity.
Not a bad outcome. What do you think?
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