THAT THE SHORTS CERTAINLY TOOK
A HILT, A N THAT, WHAT HE WAS
INTENDING TOP STOISH MUSK
UNDER MICROSCOPE "THE WALL
STREET JOURNAL" REPORTING
SECURITIES AND EXCHANGE
COMMISSION ABOUT PROBING ELON
MUSK'S TWEET TO FIND OUT IF
TRUTHFUL AFTER TESLA CEO
TWEETED TWO O DAYS AGO THIS
AND CONSIDERING TAKING TESLA
FUNDING SECURED WITH THAT, THE
STOCK RALLIED JOINING ME
FORMER SEC CHAIRMAN HARVEY
PITT THANKS SO MUCH FOR
JOINING US.
>> GOOD TO BE WITH YOU, MARIA.
>> WHAT DO YOU THINK AS FORMER
CHAIRMAN OF THE SECURITIES AND
EXCHANGE EXHIBITION WHERE DO
YOU SEE POTENTIAL WRONGDOING
HERE.
>> THE ENTIRE ANNOUNCEMENT WAS
HIGHLY PROBLEMATIC, AND
UNPRECEDENTED AND IT IS
IMPORTANT TO REALIZE IT IS NOT
THE MEDIUM BUT THE MESSAGE.
GOING PRIVATE TRANSACTIONS ARE
USUALLY ANNOUNCED IN IN
ADVANCE OF THE MARKET OPENING
OR AFTER MARKET CLOSING NOT
ANNOUNCED IN THE MIDDLE DAY OF
THE MR. MUSK TWEETED IN THE
MIDDLE OF THE DAY IN ADDITION
IT IS NOT THE CEO WHO
ANNOUNCES THIS, BUT IT IS THE
BOARD THE COMPANY THAT MAKES
THIS ANNOUNCEMENT.
HERE IT WAS THE CEO.
WHAT IS MORE IMPORTANT, IS HE
STRESSED THAT HE ALREADY HAD
FUNDING TO PAY 420 DOLLARS A
SHARE.
BUT NO EFFORTS HAVE YET BEEN
DONE TO FIND OUT WHETHER IT IS
IN THE SHAREHOLDERS BEST
PRICE, SO ALL OF THIS RAISES
ARTIFICIALLY INFLUENCE THE
PRICE OF THE STOCK?
IF HE WAS THAT WOULD BE
MANIPULATION SECOND DOES HE
REALLY HAVE MONEY IN HAND?
IS IT A BINDING COMMITMENT
THAT WOULD GIVE HIM ALMOST 70
BILLION DOLLARS IN WHAT WOULD
BE AT THE LARGEST GOING
PRIVATE TRANSACTION IN U.S.
HISTORY?
THAT WOULD BE FRAUD IF THOSE
THINGS WERE NOT TRUE.
MARIA: OKAY.
SO THE SEC NEEDS TO BETTER
UNDERSTAND WHAT HE WAS
WHERE WOULD THAT MONEY COME
EITHER A CONSORTIUM OF BANKS
IT COULD COME FROM FOREIGN
SOVEREIGN INVESTOR, I MEAN --
THE COMPANY DID RECEIVE THE
BIG CASH INFUSION FROM SAUDI
ARABIA THE DAY THAT EARNINGS
WERE ANNOUNCED THIS PAST WEEK.
IT IS A LARGE AMOUNT AND IT
WOULD TAKE A GREAT DEAL OF
EFFORT TO PUT IT TOGETHER.
BUT IT IS NOT IMPOSSIBLE.
>> HAVING SAID THAT, IT IS
UN-- IT IS UNWISE TO BE
TWEETING ABOUT THIS IN MIDDLE
OF THE DAY, CREATING ACTIVITY
IN THE STOCK, DO YOU THINK THE
SEC IS LOOKING AT THAT GIVEN
THE SFAK THAT ON THE SAUDI
ARABIA INVESTMENT NEWS STOCK
GETS RALLIED RIGHT BEFORE THIS
ANNOUNCEMENT WAS UP 7% GOING
INTO TWEET UP 11% AFTER THE
TWEET.
IT MAY NOT BE PER SE ILLEGAL,
BUT IT IS DEFINITELY HIGHLY
PROBLEMATIC AND IT COULD BE
ILLEGAL DEPENDING ON WHAT HIS
INTENTIONS WERE WHEN HE MADE
THE ANNOUNCEMENT.
>> IS THERE A DEADLINE HERE
HARVEY IN TERMS OF WHEN HE
WOULD THE TO REVEAL HIS SOURCE
OF FUNDING IF HE SAYS FUNDING
SECURED DOES SEC WANT AN
ANSWER NOW IN TERMS OF WHETHER
OR NOT IT IS SECURED AND HOW
LONG DOES HE HAVE TO COME UP
WITH WHATEVER DEAL HE WAS
I THINK HE IS REQUIRED TO
DEMONSTRATE THAT AT THE TIME
OF HIS TWEET HE ALREADY HAD A
LEGALLY BINDINGING COMMITMENT
FOR 420 DOLLARS A SHARE.
THAT WOULD BE THE REQUIREMENT
SO THE SEC CAN REQUEST OR
SUBPOENA DOCUMENTS ASKING FOR
PROOF AS TO WHAT HIS FINANCING
SECURED, A VERY STRONG TERM.
>> VERY STRONG TERM WHAT IS
THE PENALTY HARVEY IF MUSK WAS
JUST I DON'T WANT TO SAY LYING
BUT COMING UP WITH AN IDEA
THAT PERHAPS FRS WASN'T
NECESSARILY INTACT.
>> WE DON'T KNOW THE FACTS YET
BUT PENALTIES ARE QUITE SERIES
WOULD BE LIABLE BOTH CIVILLY
FOR EXTREME AMOUNT OF DAMAGES,
BUT ALSO HE COULD HAVE
POTENTIAL CRIMINAL LIABILITY
AS WELL.
>> WHY CRIMINAL?
>> BECAUSE ALMOST EVERY
VIOLATION OF THE FEDERAL
SECURITIES LAWS IS BOTH A
CIVIL PROBLEM, THAT THE SEC
PURSUES.
>> WHEN DO YOU EXPECT MORE
ABOUT IN WHEN ARE WE GOING TO
HAVE A CLEARER IDEA WHETHER OR
NOT THERE WAS IN FACT FUNDING
IN PLACE?
>> I WOULD BELIEVE THAT THE
TESLA ITSELF.
THE COMPANY WILL PROBABLY
ORGANIZE A SPECIAL COMMITTEE
OF INDEPENDENT DIRECTORS WHO
WILL THEN INDICATE EXACTLY
PURSUE MUSK'S SUGGEST THAT THE
COMPANY GO PRIVATE, I DON'T
UNTIL IT HAS COMPLETED ITS
INVESTIGATION.
>> WHAT ABOUT SHAREHOLDER
LAWSUITS HARVEY ARE YOU
EXPECTING THAT TO ALSO BE AN
SELLERS LOSS AT LOT OF MONEY
ON THAT AS STOCK WENT UP THAT
IS BASICALLY WHAT I ASSUMED
ELON MUSK WANT TO DO BECAUSE
STICKING IT TO SHORTS, YOU
KNOW YOU BEEN UNCOMFORTABLE
WITH CRITICISM THE COMPANY
RECEIVED YOU SAW A VERY
UPSETTING CONFERENCE CALL
RECENTLY HE PUSHED BACK ON
SOME CRITICISM SHORT SELLERS
QUESTIONING HIS BURN RATE HOW
MUCH CASH HE IS BURNING ARE
YOU EXPECTING HE SHAREHOLDER
>> I THINK THEY ARE INEVITABLE
IT IS JUST A MATTER OF TIME
BEFORE LAWSUITS ARE FILED
BECAUSE OF THE NORMAL
FLUCTUATION IN THE PRICE OF
THE STOCK.
I WOULD THINK THE SHORTS WILL
BRING A LAWSUIT AGAINST
MR. MUSK AND TESLA.
>> IS THERE ANY PRECEDENCE
HERE HAVE YOU EVER SEEN
SOMETHING LIKE THIS BEFORE.
>> I HAVE NEVER SOON ANYTHING
SHORT SELLERS, SUE CERTAINLY
COMPANIES AND I HAVE CERTAINLY
SEEN COMPANIES SUE SHORT
SELLERS A FACT OF LIFE IF YOU
ARE PUBLIC, YOU ARE GOING TO
GET CRITICISM, AND THE SHORTS
MEAN THAT IS WHY THEY EXIST,
SO YOU ARE EXPECTING THE SEC
TO BE ASKING QUESTIONS ABOUT
THE FUNDING, ANY OTHER
QUESTIONS COMING FROM SEC IN
YOUR VIEW.
AN ANNOUNCEMENT SOONER, WHY
THEY WAITED FOR MR. MUSK TO GO
-- FORWARD, AND I THINK THEY
WILL ALSO TRY TO DETERMINE
WHAT KINDS OF
BEHIND-THE-SCENES ACTIVITIES
WERE TAKEN BY THE COMPANY.
MARIA: SO IN OTHER WORDS,
BACKGROUND BECAUSE THE BOARD
IS SAYING YES HARVEY PITT, THE
POTENTIAL OF GOING PRIVATE
420 DOLLAR PRICE.
>> NO.
AND WHERE THAT PRICE COMES
FROM IS VERY HARD TO
UNDERSTAND.
IT MAY BE A VERY GOOD PRICE,
BUT IN TERMS OF AN ECONOMIC
ANALYSIS IT MAY TURN OUT THAT
IT IS NOT AS GOOD A PRICE AS
SHOULD BE PAID FOR THIS
COMPANY.
DOLLARS A SHARE, THAT IS LIKE
70 BILLION DOLLARS RIGHT 75
BILLION DOLLARS?
>> YES.
AND UNPRECEDENTED AMOUNT OF
WE WILL LEAVE IT THERE, HARVEY
GREAT TO SEE YOU AGAIN HOPE