Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Musk's 'joke' ManU tweet unlikely to land him regulator's red card -legal experts

Stock Markets Aug 18, 2022 09:46AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Elon Musk's twitter account and Manchester United logo are seen in this illustration taken, August 17, 2022. REUTERS/Dado Ruvic/Illustration
 
TSLA
-1.10%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
TWTR
+2.57%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Katanga Johnson and Michelle Price

WASHINGTON (Reuters) - While the U.S. securities regulator is likely to examine Elon Musk's tweet in which he joked about buying New York-listed soccer club Manchester United, legal experts say that on its face the crack is unlikely to land him in hot water.

Musk, the world's richest person, briefly lifted the gloom over the club's shares by tweeting on Tuesday: "I'm buying Manchester United ur (sic) welcome," to his 103 million followers, adding later that it was a "joke."

Even so, the 51-year-old Tesla (NASDAQ:TSLA) CEO's musings ignited Manchester United shares, which briefly jumped as much as 17% in after hours trading before ending Wednesday at $13.67, up nearly 7% on Tuesday's close.

Known for his unconventional and irreverent style, Musk has a history of moving stocks and cryptocurrencies with his tweets and has been locked in a feud with the U.S. Securities and Exchange Commission (SEC) since tweeting in 2018 that he had funding secured to take Tesla private when the SEC concluded he did not.

According to court and regulatory filings, the SEC has several open investigations into Musk's subsequent tweets about Tesla and has queried others about his $44 billion deal to buy Twitter (NYSE:TWTR) itself, which he is now embroiled in a legal fight to exit.

Joke or otherwise, the tweets are likely to draw scrutiny from the SEC, given the share price move and Musk's history of skirting U.S. securities rules, legal experts said.

"This may have been a joke to some, but it will not be to the regulators," said Jacob Frenkel, a Washington-based attorney at Dickinson Wright and a former SEC official. "Regulators will want to know what motivated the tweets," said Frenkel, adding they would likely take a hard look at trading around the tweet.

Regulators would be interested if there was evidence Musk purposely or recklessly tried to manipulate the market, said Hui Chen, a compliance consultant and former Justice Department lawyer.

The SEC declined to comment. Attorneys for Musk did not respond to a request for comment.

HIGH BAR

Still, the bar for pursuing an enforcement action is high, said several other attorneys.

Since Musk is not a Manchester United executive he does not have the same legal obligations to its shareholders as he does to those of Tesla, and there is no indication that he or anyone close to him has a major financial interest in the soccer club.

And while Musk's comments on Tesla are subject to special legal checks under a deal he struck with the SEC to resolve its allegations that his 2018 "funding secured" tweet broke the agency's rules, U.S. free speech protections afford Musk plenty of leeway to comment on issues beyond his electric carmaker.

In addition, his clarification that the tweet on Manchester United was a joke addresses the question of his intentions.

All told, it is unlikely that the SEC would be able to demonstrate that he was trying to commit securities fraud, based on the available information, said several attorneys.

"At least on the facts we know, I suspect it will be difficult to prove that Musk ... acted with intent to deceive," said Robert Frenchman, a partner at Mukasey Frenchman LLP.

Others said that Musk's track record of whimsical twitter commentary - which has ranged from an April Fool's Day quip about Tesla going bankrupt to aliens and the zombie apocalypse - could also be cited in his defense, were regulators or other parties to take issue with the tweet.

It is arguable that investors now know to treat Musk's tweets with caution, said Howard Fischer, a partner at Moses & Singer in New York.

"While Musk is already under investigation for his conduct relating to Tesla and Twitter, it appears unlikely that this will make it a hat trick," he added.

(The story has been refiled to add dropped word "up" in paragraph 3)

Musk's 'joke' ManU tweet unlikely to land him regulator's red card -legal experts
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Richard Saunders
Richard Saunders Aug 18, 2022 9:47AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The "regulators" i.e. criminals, are the joke. Musk knows this all to well. Props to him.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email