The SEC Is Suing Elon Musk Over His 420 Joke to Impress Grimes
Elon Musk’s weird bad year continues. Today, the Securities and Exchange Commission announced it is charging the Tesla CEO with fraud, based on “a series of false and misleading tweets about a potential transaction to take Tesla private.” Among the offending tweets was this one:
According to a statement from the SEC, Musk had not actually secured funding for a transaction to take Tesla private, and in fact “he allegedly knew that the potential transaction was uncertain and subject to numerous contingencies.” The SEC also points out that the proposed $420 share price represented “a substantial premium to [Tesla’s] trading price at the time. Their suit seeks to bar Musk from serving as an officer or a director for a publicly traded company in the future. This sounds pretty bad, but what we’re mostly interested is not the alleged fraud itself, but how Elon arrived at that conspicuous particular number. From the SEC’s complaint:
According to Musk, he calculated the $420 price per share based on a 20% premium over that day’s closing share price because he thought 20% was a “standard premium” in going-private transactions. This calculation resulted in a price of $419, and Musk stated that 7 Case 1:18-cv-08865 Document 1 Filed 09/27/18 Page 8 of 23 he rounded the price up to $420 because he had recently learned about the number’s significance in marijuana culture and thought his girlfriend “would find it funny, which admittedly is not a great reason to pick a price.”
Musk’s girlfriend, you’ll recall, is Grimes, or she was at the time anyway. About a month after the offending tweet, Musk smoked a blunt on Joe Rogan’s show, though if you watch the video closely, you’ll find it’s extremely unclear whether he actually inhaled. Tesla’s stock dipped by as much as nine percent after the appearance, which seems unfair. If anybody could use a minute to smoke one and just chill out for a while, it’s this guy.