Elon Musk: Short-Selling Stocks Should Be Illegal

Tesla chief Elon Musk says the pioneering electric vehicle company will remain publicly traded
AFP

As Tesla CEO Elon Musk’s settlement agreement with Securities and Exchange Commission (SEC) awaits finalization, the erratic billionaire claimed Thursday that stock short-sellers are “value destroyers” and called for the practice to be outlawed.

Responding to one Twitter user’s criticism about short selling, Musk wrote: “Short-sellers are value destroyers. Should definitely be illegal.”

Financial analyst Mel Farber called Musk’s comments on short selling “totally backwards,” noting multiple cases of frauds were previously exposed due to the practice. “[N]ot all shorts are bad, not all longs are good…,” Farber tweeted.

Unmoved by Farber’s assertion, Musk argued short-selling has a net-negative impact on the U.S. economy. “[I]t stops private companies from going public, preventing access by retirement funds & small investors, thus increasing wealth divide,” he added.

Musk’s criticisms of short-selling come after the Tesla CEO mocked the SEC in a Thursday tweet, referring to the financial watchdog as the “Shortseller Enrichment Commission.”

In a quarterly letter to investors, Greenlight Capital CEO David Einhorn ripped into Tesla, comparing the embattled electric car company to Lehman Brothers, prior to the 2008 economic downturn. “Like Lehman, we think the deception is about to catch up to TSLA,” wrote Einhorn. “There are many parallels to TSLA. In 2013, TSLA was on the brink of failure. … TSLA’s cash reserves fell to a dangerously low level and CEO Elon Musk secretly and desperately tried to sell the company.”

“Rather than communicating the truth to shareholders, Mr. Musk bluffed his way through the crisis,” the hedge fund manager added.

Last month, Musk and Tesla were ordered to pay $20 million each in files to the agency and the erratic billionaire to resign as chairman as part of a tentative settlement, after claiming in an August 7 tweet that he had secured funding to take the electric car company private.

Stephanie Avakian, co-director of the SEC’s Division of Enforcement, issued the following statement regarding the agreement: “The total package of remedies and relief announced today are specifically designed to address the misconduct at issue by strengthening Tesla’s corporate governance and oversight in order to protect investors.”

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