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The Morning Risk Report: Musk's Go-Private Tweets Could Bring Regulatory Scrutiny |
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Tesla, SpaceX and Boring Co. founder Elon Musk speaks at the 2018 SpaceX Hyperloop Pod Competition in Hawthorne, Calif., on July 22, 2018. PHOTO: Robyn Beck/Agence France-Presse/Getty Images
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Good morning. Tesla Inc. has given no indication how the company would pay for the idea of taking it private that was broached Tuesday by Chief Executive Elon Musk--and some of the wording used in Mr. Musk's tweets could draw the attention of regulators, WSJ's Dave Michaels and Michael Rapoport report.
In one tweet about the plan, Mr. Musk said: “Funding secured.” But the company has given no details of how such a buyout would work or if funding is indeed in place.
If Tesla doesn’t move ahead with a deal, or if the funding isn’t set, regulators could probe whether Mr. Musk made a false statement that caused the price of his company’s stock to skyrocket about 11%.
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Mr. Musk made the disclosure on his Twitter account, where he has over 22 million followers and has lashed out at short sellers, reporters and other critics of his company. Mr. Musk joked earlier this year on Twitter about Tesla going into bankruptcy at a time when his company’s cash position was under scrutiny.
Mr. Musk released an email he sent to Tesla workers Tuesday, which said a buyout would be subject to a shareholder vote. He didn’t offer proof to back up his claim he has money for to take the company private at $420 a share.
If he doesn’t, his statement “could be seen as manipulation” of Tesla’s share price, said John Coffee, a securities law professor at Columbia University. “That’s a factual statement, and if it’s material, that’s the kind of lawsuit plaintiffs’ lawyers regard as Christmas in August,” said Mr. Coffee.
Regulators could examine the facts behind Mr. Musk’s statement if Tesla doesn’t follow through with regulatory filings that explain the terms of the deal. The Securities and Exchange Commission can file fraud charges against companies and corporate officers it believes to have made misleading or false statements.
An SEC spokeswoman declined to comment.
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The latest Crisis of the Week involves Ohio State University and its placing of football coach Urban Meyer on paid administrative leave in the wake of reports he may have known of domestic-violence allegations against an assistant coach but continued to employ him on the Buckeyes’ staff.
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Ohio State football coach Urban Meyer speaks to the media during the Big Ten Football Media Days event in Chicago on July 24, 2018. PHOTO: ROBIN ALAM/ZUMA PRESS
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Former Malaysian Prime Minister Najib Razak was charged with money laundering on Wednesday, the latest move in an investigation into state investment fund 1MDB, New York Times reports. Authorities say the former prime minister had about $10 million transferred to his personal bank accounts from the fund. Mr. Najib pleaded not guilty.
West Virginia lawmakers voted to recommend the impeachment of all four sitting members of the state’s highest court on charges of abusing tax dollars for personal use, WSJ reports. The Republican-led judiciary committee of the state House of Delegates accused each of the justices of violating their oaths by making “unnecessary and lavish” expenditures. None of the four justices responded to requests to comment.
Two House Democrats asked the Federal Communications Commission to investigate whether Sinclair Broadcast Group broke laws by allegedly influencing ad sales at rival Tribune Media Co., another potential setback in the TV station owners’ effort to merge. The WSJ last month reported the Department of Justice is examining whether Sinclair, Tribune and other TV-station owners coordinated efforts when their ad-sales teams communicated about their performances.
A former vice president of Argentina was convicted on corruption charges Tuesday and sentenced to nearly six years in prison, Reuters reports. Amado Boudou was found guilty of helping a company out of bankruptcy for a stake in the business.
A government proposal to restrict incentives that can bias broker advice to clients is generating complaints both from Wall Street and investor advocates, WSJ reports. The plan by the Securities and Exchange Commission, developed by Trump-appointed officials, may replace some aspects of an Obama-era regulation by the Labor Department that Wall Street successfully challenged in court.
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Iran could resort to cyberattacks to retaliate against the United States for reviving sanctions against it, cybersecurity experts believe, Associated Press reports. WSJ reports Iranian hackers are developing software attacks that render computer systems inoperable until a digital ransom is paid.
Apple Inc. says its iPhones don't listen to what their users are saying without their consent, Reuters reports. The company's was responding to a letter from some members of Congress who expressed privacy concerns.
Oracle Corp. is taking the unusual action of suing the federal government before it awards a cloud-computing contract, saying it's a bad idea to award the $10 billion deal to just one company, Washington Post reports. Oracle says the process is outside of federal procurement rules and that a more competitive approach would foster innovation and not lock the government into a legacy system.
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A Virginia newspaper is suing one of its former sports reporters, saying the man failed to give up control of his Twitter account when he switched jobs. Washington Post reports a federal court is being asked to decide who owns an employee's social media account.
CBS Corp. is seeking information from AT&T Inc. about conversations it had in 2016 with National Amusements Inc., the controlling shareholder of CBS, about a potential acquisition of the media company, WSJ reports, citing a court filing. The CBS subpoena, filed Tuesday in Delaware Chancery Court, comes as the company is in a legal battle with National Amusements and its president, Shari Redstone, for control of the company.
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A Ford Motor Co. executive has left the company following allegations of inappropriate behavior, WSJ reports, citing a person familiar with the matter. It marks the second time this year a leader has departed the auto maker over misconduct claims. Prakash Patel, a global director of program management, no longer is working at the company, a Ford spokeswoman confirmed. Mr. Patel couldn’t be reached for comment.
Jury deliberations are expected to begin Wednesday in a trial in which a groundskeeper said his cancer was caused by repeated use of the Monsanto weedkiller Roundup. Reuters reports closing arguments were made Tuesday in San Francisco in the first case of more than 5,000 filed against Monsanto, part of Bayer AG.
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A new list of tariff targets was announced Tuesday by the U.S. Trade Representative Office, taking aim at another $16 billion of imports from China, Reuters reports. Semiconductors are among the 279 product lines named on the list. Despite tariffs, Reuters reports China's exports to the U.S. grew more than expected in July, showing the effects of tariffs have yet to take hold.
Firefighters in California continue to fight eight different blazes, and officials say the fires will burn for at least the rest of this month as high temperatures and gusty winds vex crews, Reuters reports. The largest of the blazes is approaching 300,000 acres and is about one-third contained. WSJ reports the fires are prompting questions about where people should live and build long-term in a state that has increasingly pushed new development into what are now
fire-prone areas.
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A helicopter drops water while battling the Ranch Fire, part of the Mendocino Complex Fire, near Clearlake Oaks, Calif., on Aug. 5, 2018. PHOTO: Noah Berger/AFP/Getty Images
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Airlines are boosting salaries and setting up training centers to combat what is projected to be one of the biggest-ever pilot shortfalls. WSJ reports that while travel has picked up in recent years, the bench of available pilots hasn’t expanded enough to keep pace. Some smaller airlines in the U.S. have had to scrap flights because they lack staff.
The Trump administration says tariffs on thousands of items from ball bearings to circuit boards are designed to counter what it sees as unfair trade practices that give Chinese firms a leg-up over their U.S. rivals. WSJ reports the impact is now being felt particularly acutely by small businesses and startups that, compared with larger operations, have less ability to deflect higher materials prices or pass along new costs to customers.
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MGM Resorts International Inc. is hiring technologists who can help the global entertainment resort company develop consumer-facing software in areas such as artificial intelligence, as technology becomes ever more central to its future growth. WSJ's CIO Journal reports the company is hiring technology workers at a time when there’s strong demand for such talent across all industries, not just technology firms.
The Samsung conglomerate said it will invest more than $22 billion over the next three years to target areas such as artificial intelligence and auto-tech components as it hunts for new growth drivers beyond phones and memory chips. WSJ reports the bulk of the spending will be earmarked for Samsung Electronics Co., the world’s No. 1 maker of smartphones, semiconductors and televisions.
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Follow the WSJ Risk & Compliance Team on Twitter: @WSJRisk, @srubenfeld, @BenDiPietro1 and @LikelyMara.
Send complaints, comments and kudos to Ben DiPietro at ben.dipietro@wsj.com.
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