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Nikola’s Stache @BSA19741
, 9 tweets, 3 min read Read on Twitter
1/ in an 8k today, $tsla again seeks to mislead the market into believing they can raise equity. $tsla is an “ineligible issuer” by terms of law with Musk’s status as a “covered person” and his sanction under anti-fraud provisions of securities laws.
2/ this disqualification extends to all manner of public and even private offerings (equity or debt) under Reg D per terms of Dodd Frank. Who or what is a “covered person” you might ask? Why Elon Musk is. Does Musk’s settlement constitute a disqualifying event? Yup
3/ Musk’s intention to purchase will be unregistered and legended shares that do not qualify for any exemptions under securities laws. They are nontransferable. And thus bear no weight on any judgement as to whether $tsla can issue publicly or privately to outsiders
4/ $tsla previously alluded to “waivers” in a NYT article. They have not received any yet. The agreement executed yesterday constitutes the whole agreement and makes no reference to any additional promises or concessions specifically. It specifically says there are none.
5/ $tsla must obtain a waiver from the SEC to regain eligibility to issue. The SEC’s helpfully provides the guidelines they will use to consider such a waiver request. You can read it here. In aggregate, $tsla has some problems here.…
6/ the factors the SEC will consider are summarized: 1. WHO? (Musk: still CEO and has not been separated - bad for $tsla) 2. DURATION (short: good for $tsla) 3. REMEDIAL STEPS (mixed for $tsla - steps clearly defined but the SEC will want to verify and they take time to implement
7/ and test. 45 days for board changes then committee formation then process evaluation. We are well into Q1-19 here) 4. IMPACT OF WAIVER DENIAL (again mixed: a denial would be catastrophic as they desperately need cash; however, the SEC will say “ok... good point... show us...
8/ that fact pattern in your disclosures to public investors” ... rock and a hard place here and big trouble for $tsla.) And yet another pillar of support why I believe you are likely to see the words “going concern” in the next 10Q.
9/ in summary, there is ZERO doubt IMO that $tsla is an “ineligible issuer” today. That fact is very unlikely to change prior to the new year. A new year means investors will want a 10k prior to participating in an offering. March? Shortseller Enrichment Commission indeed.
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