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'Tis the season to determine who's been naughty or nice. I'll give you the facts, then you decide.
This holiday story is about an SEC investigation that ended in May 2017. It was wrapped in plain, brown paper and just found under our tree, opened by Probes Reporter ("Independent Investment Research Focused on Public Company Interaction with the SEC") and Dealbreaker.
The three major players in this holiday tale are Tesla Inc. (Nasdaq:Â TSLA), Goldman Sachs Group Inc. (NYSE:Â GS), and the SEC itself.
What makes this a holiday story is that it's about gifting. Who gifted what to whom, how much, and, most importantly, why.
You decide who's naughty: Goldman Sachs, Tesla, the SEC, or all of the above?
Here are the unwrapped details...
What Tesla Knew vs. What Tesla Did
The story starts back on May 7, 2016. That's when a Tesla Model S electric car in partial, self-driving autopilot mode plowed into the side of a truck on a divided highway in Florida, killing the driver of the Tesla.
Tesla brass found out about the crash that day but didn't alert regulators until May 16, nine days later.
"Tesla then provided NHTSA with additional details about the accident over the following weeks as it worked to complete its [Tesla's] investigation, which it ultimately concluded during the last week of May," a spokeswoman for Tesla said.
Fortunately for Tesla, The U.S. National Highway Traffic Safety Administration, which doesn't comment on its own investigations, waited until June 2016 to formally announce it was investigating.
It took until January 2017, but the NHTSA "found that the owner of a Tesla Motors Inc. Model S sedan that drove itself into the side of a truck in May had ignored the manufacturer's warnings to maintain control even while using the driver-assist function."
The agency said it found no defect in the vehicle and wouldn't issue a recall.
"We appreciate the thoroughness of NHTSA's report and its conclusion," Tesla said in an e-mailed statement.
But I'm getting ahead of myself.
Two days after the fatal crash was revealed to the NHTSA, on May 18, 2016, without disclosing the fatal crash to the public, Tesla sold $2 billion worth of its stock to investors. Goldman Sachs and Morgan Stanley were the underwriters.
About $1.4 billion worth of stock was sold by Tesla in the secondary offering, to help fund expansion of facilities to manufacture the company's Model 3 vehicle. And the rest, some $600 million worth of stock, was sold by Elon Musk, Tesla's founder and CEO, to pay taxes on his acquisition of 5.5 million more Tesla shares from exercising company options.
Coincidently, on the same day Goldman Sachs was gearing up to sell Tesla stock, May 18, 2017, now 11 days after the crash and two days after Tesla reported the fatal crash to regulators, a top-ranked Goldman analyst upgraded Tesla' stock.
On the morning of the stock offering, in its May 18 note to clients, Goldman estimated Tesla only needed to raise $1 billion to fund accelerated Model 3 production. The analyst also said Goldman "sees a 22 percent upside to its six-month price target."
This was, without a doubt, interesting. But the real question lies in whether or not it was legal.
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.
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