SEC charges against Elon Musk have rocked Wall Street – but is the tech CEO the victim of a legal war?

As the CEO of a public company, there are a few things you need to know from day one.

Brushing your teeth before a board meeting – or any other meeting – is one of them.

Putting on a costume is a priority, as is not harassing the emergency services.

Another condition: if you want to buy another company, you must follow a few simple rules.

The first is to speak to an attorney knowledgeable enough to tell you to file certain forms with the government in a timely manner – within 10 days – when you accumulate more than 5% of the target’s stock.

Yes, CEO 101 stuff here.

Yet the richest man in the world, the CEO of electric vehicle maker Tesla, a very smart man who flies rockets into space named Elon Musk, did not receive this memo, as a recent measure alleges. enforcement of the Securities and Exchange Commission.

Musk seemed oblivious – and I’m being generous here – to the basic rules of disclosure when he began accumulating shares in Twitter in 2022, before taking the social media platform private and renaming it “X” . I even asked one of his lawyers, Alex Spiro, if Musk had forgotten to file the case.

Crickets.

The SEC’s accusations shook Wall Street and were portrayed as yet another attempt by a greedy fat cat to game the system.

Even if true, it may not be the greatest “crime” committed in this strange story.

It can be argued that Musk, like his new boss and friend Donald Trump, is the victim of a legal war – where his greatest crime is being a political opponent of the ruling political party.

This is a serious matter that must stop immediately or we will soon no longer have a functioning justice system.

Keep in mind that failing to disclose ownership of stocks when they reach the SEC threshold is actually quite common, as investors who are not involved in buyout transactions for a living (this would be Musk) are not always trained in certain basics, even if they should be. be.

Not like it’s a Ponzi

Also, we are not talking about anything serious like Ponzi schemes here.

The worst interpretation is that the investor has cheated the system to buy shares a little cheaper than its appreciated value, fueled by takeover buzz, at the time the disclosures are made.

This is why penalties of a few million dollars are imposed and targets can often be set without admitting or denying wrongdoing.

Small change for Musk, who is worth more than $400 billion.

But it’s not about crime or money.

It’s about the publicity and the distraction it will generate, say many legal sources I speak to.

The enforcement action took place last Tuesday evening, just days before Sleepy Joe Biden and his SEC Chairman Gary Gensler left office on January 20.

Gensler has clashed with Musk in the past over issues related to Tesla.

Yet, according to my sources, the SEC (which declined to comment) effectively relied on the evidence until the last minute of the Biden administration.

Reminder: The first news reports about Musk’s purchase of approximately 9% of Twitter emerged on April 4, 2022, when he first disclosed his stake.

The SEC says it reached the 5% threshold much earlier, in March.

He filed his returns late, and only after secretly accumulating shares without the market’s knowledge.

The SEC also said Musk struggled to accept his deposition, delaying the filing of charges.

OK, that’s not good behavior, but going back to when Musk bought the stock and when he hit 5% is not high-level policing.

It’s 100% transparent in the SEC’s inventory tracking system.

So why now?

That means the SEC could have filed suit almost the minute Musk made public his plans to take Twitter private, with or without his deposition.

As one longtime securities lawyer and former SEC official said: “The facts of this case were known from day one. So why bring it now?

The answer is obvious if you’ve been following our barely sentient president as he prepares to leave office amid a wave of pardons, executive orders designed to disrupt Trump’s agenda, and relentless attempts to imprison Trump for minor offenses in recent years.

The fight against Trump failed and he is now president. So Biden — or whoever is pulling the strings in the White House these days — is changing tactics.

The goal now is to embarrass and distract Trump, to obstruct his mandate which includes undoing just about everything Sleepy Joe has done over the past four years of his shaky governance.

Musk, as has been reported, will be at the center of dismantling Bidenomics.

He will lead Trump’s government efficiency department, known as “DOGE,” where he and entrepreneur Vivek Ramaswamy are committed to taking down the vast progressive administrative state.

There’s nothing like a civil fraud case to distract Musk.

The accusations even have the added benefit of driving a wedge between Trump’s new SEC Chairman Paul Atkins and his enforcement team that investigated the matter if Atkins raises these issues and seeks to fire or to impose a brutal sanction.

Yes, I know, Musk is not innocent here.

An interesting explanation of Musk’s role comes from a banker who knows the Tesla chief well.

“He’s not a conventional CEO in the sense that he listens to lawyers or reads balance sheets before making big decisions,” the source said.

“He works on his instinct and his impulsiveness.”

I’ll take Musk’s impulsiveness toward justice any day of the week.