Elon Musk proves once again that the rules, the standards do not apply to him
But many of Musk’s other moves over the years have broken the actual rules, not just bent the norms, but none of it has slowed him down or changed his behavior.
Any financial penalties that regulators or trading partners might put in place mean little to someone as wealthy as Musk. He walks, tweeting proof that the normal rules don’t apply to the ultra-rich if they choose to ignore them.
An investor who buys 5% or more of a company’s stock has 10 days to disclose the purchases, so other investors can be aware of what is affecting the stock price.
Had Musk made the required filing in a timely manner, it would likely have cost him significantly more to accrue the 15 million shares he purchased after the 10-day deadline.
The late disclosure saved Musk $143 million by keeping the stock price lower than it could have been as he continued to buy stocks, estimates Daniel Taylor, an accounting professor at the University of Pennsylvania.
“I think it could be laziness or the belief that the rules don’t apply,” Taylor said. “But if you look at when the SEC enforces a late filing, it’s relatively rare. From a cost-benefit perspective, it makes sense not to file. Even if the cost of a late filing is a fine of $100,000 or a multi-million dollar fine, why wouldn’t he [delay filing]?”
Musk is still fuming over that deal he signed with the SEC, saying he only did it because the banks would have otherwise cut off Tesla’s funding and forced the automaker into bankruptcy. But Taylor said the SEC action amounted to little more than a slap on the wrist.
“They had an opportunity to send a strong signal and chose not to,” Taylor said.
Other rules Musk ignores
The stake disclosure regulations are just the latest in a long line of rules that Musk has flouted — with little to no consequences.
Traditional automakers issue recalls when they discover a flaw in the design or construction of a car. That’s why the National Highway Safety Administration, the federal regulator, named the office that reviews consumer complaints and crash data the Defect Investigation Bureau.
Even before the test flight took off, the FAA had denied a safety waiver requested by SpaceX. But the company still moved forward.
An FAA investigation ensued, but SpaceX ultimately came away with little more than “corrective action” orders.
— Jackie Wattles of CNN Business contributed to this report