I've been digging into this and here is some interesting info on the JPM v TSLA dispute:
JPM claims that the basis to make the strike price adjustment that JPM wanted to make, and Tesla disagreed with, is based upon the occurrence of an “Announcement Event.” What is an Announcement Event? From the complaint:
Was there an announcement of a Tender Offer?
What is a Tender Offer?
from: https://www.rbccm.com/assets/rbccm/docs/legal/doddfrank/Documents/ISDALibrary/Users Guide to the 2002 ISDA Equity Derivatives Definitions.pdf
It isn't clear to me that the tweets (or the related 8-ks that followed) count as such an announcement, but coming back to that, let's suppose there was an announcement of a Tender Offer, what about the adjustment? How does JPM get to make an adjustment and what sort of adjustment?
This suggests that the Calculation Agent (JPM) would generally make the adjustment similar to an adjustment that the Options Exchange would have made.
Does anyone know if the relevant Options Exchange made any adjustments at the time of the Funding Secured tweets?
It seems that the other banks with similar rights did NOT make such Calculation Agent Adjustments, and if the relevant Options Exchange also did not make similar options changes, then those facts weaken JPM's arguments that JPM met the "good faith" and "commercially reasonable" standards for their adjustments.
JPM claims that the basis to make the strike price adjustment that JPM wanted to make, and Tesla disagreed with, is based upon the occurrence of an “Announcement Event.” What is an Announcement Event? From the complaint:
Was there an announcement of a Tender Offer?
What is a Tender Offer?
from: https://www.rbccm.com/assets/rbccm/docs/legal/doddfrank/Documents/ISDALibrary/Users Guide to the 2002 ISDA Equity Derivatives Definitions.pdf
It isn't clear to me that the tweets (or the related 8-ks that followed) count as such an announcement, but coming back to that, let's suppose there was an announcement of a Tender Offer, what about the adjustment? How does JPM get to make an adjustment and what sort of adjustment?
This suggests that the Calculation Agent (JPM) would generally make the adjustment similar to an adjustment that the Options Exchange would have made.
Does anyone know if the relevant Options Exchange made any adjustments at the time of the Funding Secured tweets?
It seems that the other banks with similar rights did NOT make such Calculation Agent Adjustments, and if the relevant Options Exchange also did not make similar options changes, then those facts weaken JPM's arguments that JPM met the "good faith" and "commercially reasonable" standards for their adjustments.
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