Case 49: Tweeting

Roils the Market

Scotty Thornton
 Case Background
On August 7, 2018, co-founder and CEO of Tesla and various other corporations, Elon Musk, took to

Twitter and tweeted, “Am considering taking Tesla private at $420. Funding secured.” The tweet

initially sparked interest amongst stocks buyers since they were anticipating the change. Musk

claimed that the reason for this change was his goal to get Tesla to a place where it would be able to

run at its full capacity without distraction, where there would be as few changes as possible for both

their investors and employees. However, there was no funding secured for this plan that Musk

mentioned. Tesla’s stock value rose by 11% the day the tweet was posted, but fell more than 30% by

late September and the corporation lost almost $20 billion.

Effects of the Case

After Musk’s tweets were found to be false and that Musk had no intention on taking Tesla
private or had the funding to do so, he was sued by the corporation’s shareholders for their
lost wages and fined by the Securities and Exchange Commision (SEC). The SEC is an
independent agency in the U.S. Federal Government and aims to enforce the law against
market manipulation.

● Musk agreed to step down from his chairman position within the corporation for three
years
● He also agreed to pay a $20 million fine
● A committee was formed to monitor Musk’s communication with investors and
conflicts of interests
Ethical Standpoint

Tesla ultimately agreed to review Musk’s communication regarding the corporation, but did
not prohibit him from tweeting or posting statements regarding Tesla. Was this an ethical
decision and who is charged with the ethical responsibility? I personally do not think that
this decision was ethical. I say this because:

● Although Elon Musk may not view himself as a celebrity or public figure, he is viewed
as one by many. Therefore, he has impact and should be held accountable for the
things he says; especially if he sees first-hand the effect that he has on the stock
market.
● Free speech can only go so far. There has to be an end put to reckless misreading of
information.
● Kant would would suggest being truthful
Similar Situation: Kim Kardashian & the SEC

On June 13, 2021, Kim Kardashian, a popular American media personality, made a post
touting a crypto asset security by the name of “EthereumMax” or “EMAX,” that was being
offered and sold. Kim failed to state that she was being paid to do this. She gave this security
publicity, which drove the stock price up and violated section B of the securities act.
Kardashian violated the federal securities laws’ anti-trouting provision, according to the
SEC’s order.

● This resulted in Kim being fined $1.26 million for the post and not disclosing how
much she was being paid to make this post.
● The news broke on the 3rd of October, 2022.
Exploitation Update

Since this incident, Musk has continuously exploited information. This has been done with
Musk’s

● Twitter: Musk inquired to buy the social media giant for over $43 billion. This was
done in order to push the company further towards a private future that also protects
“all types of free speech.”
● Dogecoin: Similar to the Tesla case. Elon Musk sued for $258 billion for intentionally
driving up the stock price of Dogecoin, a cryptocurrency, more than 36,000% for over
two years; then letting it crash. The crash resulted in Musk creating tens of billions
more dollars for him at the investor’s expense.
● Space X: After a sexual harrasment allegation from a flight attendant, the corporation
had to pay $250,000 in a severance agreement for the woman’s silence.
Works Cited

Media Ethics Cases and Moral Reasoning, 11th edition, by Clifford G. Christians, et al. (Routledge)

Smith, C. (2022, October 4). Elon Musk Is Ready to Complete Twitter Deal. The Stock Surges. Barron’s.
Retrieved October 19, 2022, from https://www.barrons.com/articles/elon-musk-twitter-deal-51664900854