• Elon Musk accused of illegally selling $7.5 billion in Tesla stock in Q4 2022.
  • Lawsuit alleges Musk and board violated fiduciary duties by selling shares ahead of disappointing vehicle sales data.
  • Shareholder seeks disgorgement of $3 billion in illegal gains and damages from directors for reckless behavior.
  • The Pantser@lemmy.world
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    5 months ago

    Isn’t that the definition of insider trading? Lock him up like Martha, she did way less and served time in a prison resort.

    • CraigeryTheKid@lemm.ee
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      5 months ago

      I need to look up how “insider trading” even works.

      When you are the CEO, and you make decisions, and you own your own stock - wouldn’t everything you ever do be with insider info? It is just honor system pinky-promise to act in good faith? I mean that sounds super effective.

      • teletext@reddthat.com
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        5 months ago

        Normally you publicly say looong in advance, like at least half a year in advance, that you plan to sell this amount of shares at this point in time. No more, no less, not earlier, not later, no backsies.

        • Warl0k3@lemmy.world
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          5 months ago

          Well no, there is backsies. You can rescind your intent to sell within a couple days. What most CEOs do is set up regular sells every month way in advance, then choose not to sell unless its opportune at the last minute. If that sounds like it completely defeats the purpose of the rule in the first place, yep! The system is rigged.

          • CleoTheWizard@lemmy.world
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            5 months ago

            Wouldn’t say completely. The notice of intent to sell is not there to prevent CEOs from selling when they want to, it’s to notify you that they could sell this much if they wanted to.

            The purpose is just to say that you need to be prepared for a potential sale. If the CEO keeps backing out of a sale, that does hurt your ability to predict when they will but not how much they could sell and therefore how much those sales could potentially affect your investment.

            All of that is strategic because otherwise investors could conceivably do the opposite and sell before the CEO is forced to sell and then buy his shares at a lower price. That would mean the stock would tank every time the CEO went to sell. The problem exists because most of the solutions are even worse

            • Warl0k3@lemmy.world
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              5 months ago

              That’s a fair point, thank you! I was mostly commenting because that rule gets brought up every time someone talks about insider trading (and musk specifically) as a defense and it’s deeply irritating. It makes sense the rule is more about not hobbling CEO investment than insider trading since it really doesn’t do much to prevent the latter.

            • theneverfox@pawb.social
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              5 months ago

              The problem exists because most of the solutions are even worse

              Everything you said makes a lot of sense, but this drives it home… The stock market is so unbelievably ridiculous. It’s just unmanageable, it’s such a simple idea with such horrible effects it might be a great filter

      • Aurenkin@sh.itjust.works
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        5 months ago

        At my workplace we are only allowed to sell stocks within certain windows, usually it’s a brief period immediately after we publicly release earnings. I think for higher ups it’s even more restrictive.

        • NotMyOldRedditName@lemmy.world
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          5 months ago

          We had a 2 week window 2 or 3 days after earnings were released.

          Edit: You could preschedule sales though like recurring once a month, but it wouldn’t take effect immediately. I can’t remember what the delay on that was, but it might have been starting after the next earnings?

        • EnderMB@lemmy.world
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          5 months ago

          I’ve known people at IC level sell outside of windows and barely get a mention. Some people have odd vesting schedules for things like RSU’s, so sometimes it’s unavoidable.

          At higher levels, it’s locked down considerably. My old director said that he had to have a meeting to go through a sale of his stock, so that it could be approved to be out of a window of potential releases in the company outside of his own division. I imagine that at VP+ level you need accountants just to handle what is a few clicks for an average corp worker.

      • Johanno@feddit.de
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        5 months ago

        That’s only the 5th time he commits fraud. He has been at court several times because of his actions. It seems no one really wants to arrest him

        • jaybone@lemmy.world
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          5 months ago

          He should run for president. He can claim the long form version of his birth certificate says he was born in Hawaii.

    • exanime@lemmy.today
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      5 months ago

      Yes but you see, he is a billionaire… Insider trading and other laws are for the pauper rich

    • jaybone@lemmy.world
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      5 months ago

      I love how resort is tacked on there at the very end. Like you read it in a quiter voice.

    • Pennomi@lemmy.world
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      5 months ago

      No, that’s counterproductive because the government uses those services. Instead, the government could confiscate his stock in those companies.

      • TWeaK@lemm.ee
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        5 months ago

        SpaceX would probably be more profitable if they didn’t have to spend so much time and resources on preventing Musk from interfering with things.

        • Pennomi@lemmy.world
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          5 months ago

          It’s mostly Tesla and Twitter that he’s wrecking, but yeah Shotwell does sometimes rescue SpaceX from terrible ideas he has, like canceling Falcon Heavy.

          • TWeaK@lemm.ee
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            5 months ago

            Twitter was wrecked with the purchase, it’s been on borrowed time since. The business is now worth less than the $13bn loan it took out to buy itself on Musk’s behalf. It was a leveraged buyout, just like every business that goes under after “being saddled with debt”.

        • theneverfox@pawb.social
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          5 months ago

          I think you’re really undervaluing his contributions. Think of it from an employee of space X’s shoes

          Having the big boss show up one day and yell “I want to launch my car out of orbit, start building a prototype right now, and everyone is doing overtime until it’s done! I’ll be sleeping in my office and walking around looking for excuses to fire people” is irreplaceable.

          Do you think engineers build things just because that’s what they do? Obviously you need to have someone rich yelling at them and threatening to fire people

    • cosmicrookie@lemmy.world
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      5 months ago

      So… i vaguelly knew about her so did some searching

      she served five months in federal prison for fraud and was released in March 2005. There was speculation that the incident would effectively end her media empire,[2] but in 2005 Stewart began a comeback campaign[3] and her company returned to profitability in 2006.[4] Stewart rejoined the board of directors of Martha Stewart Living Omnimedia in 2011[5] and became chairwoman of her namesake company again in 2012

      Its pretty mild isn’t it?

      • Fedizen@lemmy.world
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        5 months ago

        except they wont even do that to musk. Nobody wants to try a billionaire in court, musk is known to send armies of private detectives on people. He’ll close a factory in your district out of spite. Billionaires are afraid of taxes because as long as they have way too much money they can continue to do the illegal shit that made them rich.

  • exanime@lemmy.today
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    5 months ago

    How could a CEO of any company trade his own stock from the company and not be insider trading?

    The fact they are allowed to control stock is laughable… At best, stock from the company you control should be in a blind trust (which would still be laughable but we can at least pretend)

    • Michal@programming.dev
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      5 months ago

      They have to give advanced notice before selling, they can’t just sell stock on the whim.

      • exanime@lemmy.today
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        5 months ago

        So?.. I am the CEO… I know our new line of highly anticipated space tentacle dildos are not going to be in stores by Christmas as expected, I give notice and sell stock before the public finds out and stock goes down

        I also know, because of the delay, we are squeezing the Chinese manufacturer, so I will give notice and buy the stock in January knowing we are probably going to offer deep discounts to get those consumers back

        How is giving advance notice any safety? unless the rules say they need to give 500 days of notice or something long enough there is no possible way to predict properly with ALL the information and power a CEO would have to manipulate the stock

        • dependencyinjection@discuss.tchncs.de
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          5 months ago

          I don’t want to defend CEOs here, but there is a code for in the USA, Rule 10b5-1, which sets out a CEOs stock trading plan.

          The reason, if you’re not Elon Musk, is that most CEOs are paid in stock and so it’s inevitable they’re going to sell some. So they set out a plan to say I will sell X shares on X date and the market shouldn’t be spooked.

          What Elon did here is sell 45 million shares, seemingly outside of any plan, which is insane. Usually they wouldn’t be offloading such a volume.

          Selling a small amount of your stock doesn’t indicate you don’t have faith in your own company, but more that you want to convert some of your reward (pay) into actual cash.

          I’m not saying the system is good, just that this is how it works.

          • exanime@lemmy.today
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            5 months ago

            I’m not saying the system is good, just that this is how it works.

            Totally get it… which is why my comment was intended to mean “what the fuck kind of system is this”… not “Elon bad”… although, yes, Elon bad ;-)

        • dogslayeggs@lemmy.world
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          5 months ago

          If I’m a stock holder or potential buyer of stock and I read that the CEO is dumping billions of dollars of his own stock, I am going to think something bad is happening. Notifying the public in advance gives us more information to decide what we should do.

          Sometimes, that information just tells us this is a scheduled dump of a small percentage, which is normal and expected. Sometimes it is a huge dump, which is unexpected.

          • exanime@lemmy.today
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            5 months ago

            If I’m a stock holder or potential buyer of stock and I read that the CEO is dumping billions of dollars of his own stock, I am going to think something bad is happening. Notifying the public in advance gives us more information to decide what we should do.

            They don’t have to notify the public at all

            There is nothing in the SEC laws that makes it necessary to disclose the use of Rule 10b5-1 to the public, but that doesn’t mean companies shouldn’t release the information anyway. Announcements of utilizing Rule 10b5-1 are useful in warding off public relations problems and helping investors understand the logistics behind certain insider trades.

            source

        • rbesfe@lemmy.ca
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          5 months ago

          The public will see the notice and sell their stock before the CEO can, tanking the price

          • exanime@lemmy.today
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            5 months ago

            The rules do not specify the public should be informed at all

            There is nothing in the SEC laws that makes it necessary to disclose the use of Rule 10b5-1 to the public, but that doesn’t mean companies shouldn’t release the information anyway. Announcements of utilizing Rule 10b5-1 are useful in warding off public relations problems and helping investors understand the logistics behind certain insider trades.

            Source

  • Cyborganism@lemmy.ca
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    5 months ago

    This is bullshit. My EV ETF is not doing well and I’m losing my investment while this jagoff gets to sell his stocks ahead of the announcements and runs away with the money? Fuck that shit.

    Shareholders should fucking sue if the government ain’t gonna arrest him for insider trading.

    • kora@lemmy.blahaj.zone
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      5 months ago

      I wish I knew money enough to actually understand your comment, but here we are, both hating Elon and wanting him dealt with. Its beautiful really.

      • Cyborganism@lemmy.ca
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        5 months ago

        An ETF is an investment fund made up of stocks from different companies. A fund based on electric vehicle market could include Tesla, Chevrolet, Toyota, Ford, Kia and various other companies building EV parts like BASF or Northvolt for batteries or chargers.

        The fund could be composed of, say, 30% Tesla, 10% Chevrolet, 10% Kia, 5% Ford, etc.

        You can invest in the fund by purchasing parts, which then give you a return based on how many parts you bought and the performance of the stocks in the fund.

        Does that make sense?

    • r00ty@kbin.life
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      5 months ago

      If you’re using the ETF as a long term investment and you believe EVs are key to our future then you shouldn’t worry about this too much (unless the ETF is made up of mostly TSLA in which case I’d not be too happy).

      You’ve not lost money until you take it out of your investment.

      • Cyborganism@lemmy.ca
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        5 months ago

        True.

        And Tesla is in the top 10 stocks with the highest percentage in the ETF. But doesn’t hold as much importance as it used to it seems.

        I just went and looked again and now the #1 is Nvidia. It used to be Tesla. I guess whoever is managing the fund was good enough to see what was going on and modified the investments.

    • tal@lemmy.today
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      5 months ago

      I believe that normally companies have restricted time windows for trading for people who may have access to information about the company.

      kagis

      https://corpgov.law.harvard.edu/2021/06/02/determinants-of-insider-trading-windows/

      At most publicly traded firms, an insider trading policy (ITP) establishes a pre-specified open trading window each quarter when insiders are allowed to trade, which dictates a corresponding “blackout” period in which they are prohibited from doing so. The typical trading window begins 2-3 trading days after the previous quarter’s earnings release and ends approximately 2-3 weeks prior to the end of the next fiscal quarter, resulting in an allowed trading window of about six weeks. These restrictions on insider trading activity potentially provide both protection from legal or regulatory action as well as liquidity and cost of capital benefits (e.g., Fishman and Hagerty, 1992). Although there is substantial variation in the length and timing of these trading windows, little is known about the factors boards consider when determining these constraints. Furthermore, in addition to these pre-specified trading windows and corresponding blackout periods, firms may impose event-specific trading restrictions on insiders (e.g., due to ongoing merger or acquisition negotiations). These “ad hoc blackout windows,” which are undisclosed to the public, are largely unexplored in prior literature.

      • Cyborganism@lemmy.ca
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        5 months ago

        Normally, yes. Working in a couple of big corporations, we would be told when we can’t trade because of internal announcements. We could potentially be accused of insider trading. Unless this read a timed trade that was already scheduled ahead of time.

  • IHeartBadCode@kbin.run
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    5 months ago

    Forgot the final bullet points

    • US Government does jack shit in terms of legal ramifications for breaking law.
    • Musk pledges to break US law once again.
    • BigBananaDealer@lemm.ee
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      5 months ago

      its only illegal if youre dumb enough to not be paying judges and politicians. its not even a lot of money either like a couple thousand and theyll vouch for you

  • set_secret@lemmy.world
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    5 months ago

    What a joyous year if we could get Trump and Elon in jail this year… They could be roomies!

    • UnderpantsWeevil@lemmy.world
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      5 months ago

      Neither of them are going to prison. Trump’s judge explicitly said as much during his 10th contempt citation, and Musk has been pissing on the leg of the SEC for the last five years straight with no consequences.

      • mudstickmcgee@sh.itjust.works
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        5 months ago

        Would be a pretty funny “prison break esque” movie though.

        The key to escape is Donald’s tiny hands can reach things other prisoners hands are to big for.

        • Honytawk@lemmy.zip
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          5 months ago

          And Elmo creates the perfect diversion by convincing every other prisoner to invest in prison coins, only to pump and dump em causing a riot.

  • some_guy@lemmy.sdf.org
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    5 months ago

    Lonnie wouldn’t break investing rules. I trust him. He’s a super genius and will save us all. Now let me go post racist bullshit on his everything app so people will think I’m cool.

    He’s a shithead. There will never be meaningful consequences. I hope he takes a rocket into space and never comes back.

    • masterofn001@lemmy.ca
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      5 months ago

      I hope it does come back.

      In a beautifully catastrophic arial display, of him and the others trying to escape, burning brilliantly on rentry.

      “Nobody gets out alive - especially the billionaires” ~Jimbert Morrenstein

      • Semi-Hemi-Lemmygod@lemmy.world
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        5 months ago

        No, living on Mars will be terrible. I want him to get what he wants and be slowly poisoned while eating algae surrounded by people he hates in a small tin can buried in the ground.

  • suction@lemmy.world
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    5 months ago

    Used to be you pull this shit (insider trading) and be locked away for life. Times they 'r a changing, indeed.

  • njm1314@lemmy.world
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    5 months ago

    When are Tesla shareholders going to wake up and understand that he’s scamming them. You’re all dupes and he’s going to ride you to the last second and let you all burn.

    • Hotzilla@sopuli.xyz
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      5 months ago

      They are accepting his request to give him 50b$ worth of extra stock, at the same time as they are laying off people. What a joke.

  • Ballistic_86@lemmy.world
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    5 months ago

    Insider trading seems to have been perfectly legal for the last few decades. Nothing will come of this or it would start setting precedent that we could use against our government leaders and other billionaires and federal judges. Not gonna happen.