Displaying items by tag: SEC

(Washington)

The SEC’s best interest rule has been giving brokers headaches almost since the demise of the DOL rule. Many groups have commented on the rule’s failing, including its governance on the use of titles and its deeply confusing attempt at delineating between brokers and advisors. However, one of those gripes now seems to have played out in practice, as early results from the SEC’s testing of its Customer Relationship Summary form (CRS) has essentially failed. According to the chief of the firm hired to do the study for the SEC, “Overall, participants had difficulty throughout the proposed CRS with sorting out the similarities and differences between the broker/dealer services and investment advisor services, and integrating this information across sections”.

FINSUM: This supports exactly what everyone in the industry has been saying—the rule is totally confusing and does nothing to help consumers. The SEC is going to have to do a major rewrite.

(Los Angeles)

The saga of the Tesla buyout is finally over after three agonizing weeks. Musk announced Friday that Tesla had put its plans to go private permanently on hold. The Wall Street Journal has run a long article chronicling the internal decision-making process, but ultimately Musk and the board decided it as not an optimal decision, not least because keeping small investors on board wouldn’t have been an option and Tesla would have had to bring on competitors as investors. The stock dropped on the news.

FINSUM: If what we read is correct, Musk did not want Volkswagen to be an investor in the company. That, combined with the Saudis backing away, seems to have been a big part of staying public.

(San Francisco)

Investors are currently anxious about the SEC’s investigation of Tesla and Elon Musk, not only over the infamous tweet, but also about guidance the company has given over the years. However, Bloomberg says investors shouldn’t be worried because the SEC is unlikely to take any serious action. Bloomberg points out that the San Francisco office of the SEC is woefully understaffed and outgunned and has almost no history of going after top tech executives, something that has led the tech sector to act with more impunity than in finance.

FINSUM: We aren’t sure we like this analysis much. If there were ever a time the SEC might want to make a statement, this would be it.

(Washington)

Bloomberg is reporting that the SEC is under a lot of pressure regarding its investigation of Tesla and Elon Musk. The SEC usually investigates companies without public knowledge, but Musk’s very public tweet changed their whole investigation (which has been going on for months), and they are now under pressure to punish the company or Musk personally. The investigation is now so public that the SEC would come under heaps of political criticism if it were to exonerate Musk.

FINSUM: The other question here is timing, as it can take years for the SEC to determine if laws were broken, but investors want an answer quickly.

(Washington)

Some very interesting news about Tesla emerged yesterday. While it was already known that the SEC had subpoenaed Tesla over Elon Musk’s recent tweet about taking the company private, it emerged yesterday that the company was already the subject of an SEC investigation into whether it had misled investors. In particular, the SEC is probing whether Tesla misled the market with its Model 3 production forecasts. The actual production of vehicles last year was woefully short of the company’s forecasts.

FINSUM: Musk’s actual delivery of vehicles was just 10% or so of his initial forecast, which is likely what sparked the investigation. However, this is apparently a very difficult case for the SEC to prove, so it seems unlikely to amount to much.