Actually.. Let's think about this for a couple of minutes.
Elon's stated that the corruption at the SEC is pretty deep. Frankly, having watched them do their thing over the past couple of decades, especially with respect to their hands-off approach on Bernie Madoff until his scam became unbelievable, I'm willing to believe that.
Further, what with swinging doors and regulatory capture.. And this Really Weird Thing where short sellers and their ilk can lie there butts off but CEO's aren't allowed to say boo.. Something doesn't smell right.
So, let's say, for argument's sake, that the SEC is corrupt to the point where their close friends on Wall Street, short sellers, hedge funds, people who run algobots that manipulate the stock price for profit and rob investors, never get touched and, pretty much, run the show.
I'll allow that the SEC probably does go after penny-ante crime ($100,000 there, a million here, where individual traders rob the elderly blind and all that), if for no other reason than to make the general public think that the SEC is keeping the big robber barons out. So the money train keeps on running.
So, if you're a CEO, you're not supposed to say anything unless you're covered in lawyers who are attempting to make the CEO follow insane and arcane SEC rules.
Suppose one owns a hardware store. Some local reporter comes by and asks how it's working out on Main Street. The owner snags the suspenders, pulls them out, and says, "It's all looking pretty good! There's reports that a big builder in town may be setting up to use my place as a source for all their wood, and I'm stoked!"
Following day the big builder goes to a big box store, instead. If ye hardware store vendor played by the SEC rules, he'd be sued by the SEC. Just How The Heck Does That Make Sense? Answer: It doesn't.
And
what blame difference does it make if one is an activist investor or not? If one owns the shares, one owns the shares. Just who, exactly, is that rule protecting, anyway? (Yes, the SEC usually says, "Investors! We Protect Them!" But.. from what, exactly? It's not like it's a
secret that somebody owns a lot of shares, is it?)
What I figure: Elon's in there as a, "non-activist" investor. When asked about it, he speaks his mind. In public, even. The SEC goes bananas and tries to punish him.
If There's One Thing That The Federal Judiciary Knows About 1st Amendment Rights, It's That Prior Restraint on Speech By A Government Agency Is Expressly Forbidden. Strict scrutiny, I think they call it.
I think Elon's getting set to dare the SEC. And haul them into court. And (this would be fun) do a Little Discovery on these types.
It's that last bit that probably has the SEC quaking in its boots. On the one hand, if Elon flouts a long-standing rule with prior restraint built in, the SEC may feel forced to Do Something About It, i.e., haul Elon into court. On the other hand, if what they're doing is pretty much unconstitutional and therefore illegal, they may get exposed to Discovery.. and then things would get ugly for the SEC.
Think of Elon investing in Twitter as a chess move:
- On the one hand, clean up Twitter some and get the bots, misinformation peddlers, and crooks out of there. Even if it does slow down revenue in the short term. In the long term, better for everybody.
- On the other hand, putting the SEC into a position where they have to do something, but doing something means shooting themselves in their own collective feet.
People like to claim that Elon is impulsive. That may be true. But he's not an idiot, either. I suspect that he's got lawyers laying traps for the SEC, and has had, for probably at least a year now.
Popcorn, anybody?
