But many of Musk’s other moves over the years violated actual rules, and not only did he get around the standards, but none of them slowed him down or changed his behavior.
The financial penalties that regulators or business partners might impose don’t mean much to someone as wealthy as Musk. He walks, tweeting proof that normal rules don’t apply to the super-rich if they choose to ignore them.
An investor who buys 5% or more of a company’s stock has 10 days to disclose his purchases, so that other investors can be aware of what affects stock prices.
Had Musk submitted the required filing in time, it would have likely cost him a lot to accumulate the 15 million shares he bought after the 10-day deadline.
The belated disclosure saved Musk $143 million by keeping the stock price lower than it would have been while continuing to buy shares, estimates Daniel Taylor, an accounting professor at the University of Pennsylvania.
“I think it might be laziness or a belief that the rules don’t apply,” Taylor said. “But if you look at when the Securities and Exchange Commission (SEC) mandates late filing, it is relatively rare. In terms of cost and benefit, it makes sense not to file it. Even if the cost of late reporting is a $100,000 fine or a fine of several million of dollars, why not [delay filing]? “
Musk remains angry about that settlement he signed with the Securities and Exchange Commission, claiming he only did so because the banks were going to cut Tesla’s financing and force the automaker into bankruptcy. But Taylor said the SEC’s action was nothing more than a slap on the wrist.
“They had the opportunity to send a strong signal and they chose not to,” Taylor said.
Other rules Musk ignores
The regulations on disclosing ownership stakes are just the latest in a long line of rules that Musk has broken — with few, if any, consequences.
Traditional automakers issue recalls when they discover a flaw in the design or construction of a vehicle. That’s why the National Highway Safety Administration, the federal regulator, appointed the office that looks at consumer complaints and accident data the Bureau of Defect Investigation.
Even before the test flight took off, the FAA refused a safety waiver requested by SpaceX. But the company went ahead anyway.
An FAA investigation followed, but SpaceX eventually walked away with more than one order of “corrective actions.”
CNN Business’s Jackie Wattles contributed to this report