On May 1st 2020, Elon Musk tweeted “Tesla stock price is too high imo”, which many are questioning if it broke SEC rules since the stock price did in fact fall 10 percent that same day. This could be viewed as market manipulation, by artificially affecting the prices of a security and thus profiting from a drop in price. Even so, our Alma Angotti, Partner and Practice Co-Leader of Global Investigations and Compliance, states that market manipulation only requires intent. In a recent The Verge article she states that “He doesn't need to benefit, though benefit is often how the government proves intent”. In addition to the possible manipulation, the tweet did not observe the correct avenue of informing shareholders of security overvaluation.
When a company wants to convey to its shareholders that the prices of a security may be overvalued, they accompany those statements with facts, and facts were missing from his tweet. Alma Angotti says that “you give facts so the market can analyze those facts. There’s not a good reason for him to say he thinks it’s overvalued that I can think of, especially in an informal way”.