founder elon musk. >> the press conference due to start. and melissa lee will continue the coverage of tesla, the s.e.c.'s news conference which as we said starts soon melissa over to you. >> thanks guys so much to cover "fast money" starts right now. marilyn story breaking just the last few minutes s.e.c. sues tesla ceo elon musk for fraud. check out the stock, down by 10.25% in the after hours session. you are looking at a live shock shot the s.e.c. about to hold a news conference in washington, d.c. we bring it live as soon as that gets started meantime we have coverage around david faber and phil le poe at a tesla dealership in california david let's start off with you. >> thank you, melissa. let's set the scene for people at this point so they can understand where we are. about an hour ago we got the news the s.e.c. was charging elon musk with fraud, misleading statements, false statements that led to a move in tesla's stock price that they describe at least was for the before of

perhaps defeats short sellers that had become his enemy. talking about reckless behavior in not knowing the statements were false and misleading, omitting material facts, premisesed on a long series of baseless assumptions and contrary to facts that mr. musk knew at the time of course this refers to that series of tweets, one of the key ones being funding secured that took place on the 8th of august that had the effect of sending up the stock price on news he was pursuing a go private transaction. the s.e.c. claims that caused market chaos and harmed tesla investors. set off a trading frenzy, says the s.e.c. and the trading volume and price of tesla did immediately spike there after. they do seek to bar mr. musk as an officer or director of a publicly traded company. that is typically what they lock for in actions like this important to note the complaint is against just mr. musk

does not include tesla itself. and there are any number of defenses i think we're going to start to hear from mr. musk in terms of his behavior on that day and way in fact he felt that it was a correct statement to say that funding has been secured. the company citing what they believe -- or were quite a few meetings that mr. musk had had with the public investment fund of saudi arabia in which he was led to believe that they were fully behind the idea of taking the company private and would be a source of funds for that effort they also go on to cite a number of different reasons as well, that the s.e.c. should not have taken this action, because of the harm that it will bring to shareholders of the company itself let me read here one thing that we got, at least from tesla on in inquiry they say it may have been unusual for someone contemplating a buyout but mr. musk did not approach

this as a typical take private transaction. they say he had no intention of increasing ownership or control of the company he had no intention of cashing out of his own equity pch he had in fact no motivation at all he wanted existing shareholders to remain with the company if that were possible to do so. so their argument is simply that in fact that was not the case. and they go on to say that mr. musk may actually have been motivated by correcting a false impression in the market when news of a $2 billion investment was reported in tesla by the saudis he may have been under the mistaken assumption that the news of his conversations about a potential go private had leaked and was simply trying to actually clarify and release to the market all the information that he knew at that time. none of this appears to have been enough, clearly was not, to convince the s.e.c., melissa, not to bring today's action, which if they are successful in proving it would result

potentially in fines and in mr. musk being removed as a ceo of this company or as an officer or director of any public company >> just last month, david, the company acknowledged it received of an informal request from the doj, a volunteer request for documents which many thought was the first step in a fraud investigation. how does in s.e.c. suit dovetail it at all with the doj investigation. >> unclear and i have to say i haven't done enough reporting on it to understand as you well know we do have cases where of course the s.e.c. and the doj act together to bring an action, both criminal and civil in nature against a particular company and/or officers of those companies. think, for example, fraud at a particular company in this case, the a ausa in san francisco, may kin to be investigating whether or not this rises to the level of criminal activity in nature.

but all we know at this point is that the s.e.c. chose it had enough time -- or enough evidence to move for a civil claim and make its complaint important to note the sec hasn't done much. its fiscal year is ending september 30th some noted that to me as saying they maybe wanted to make the justification for the existence before the end of the fickle year i know that may be a cynical take but you may hear more about that as well. >> david one last question in terms of the s.e.c.'s effort we might have to go to press conference now -- to potentially bar elon musk as being an officer of a publicly traded company. this seems to differ from past instances where it has been done in that he didn't personally gain per se from any sort of fraud. it wasn't insider trading, wasn't cooking the books. >> that is true. and it certainly was for the and the company would make the case that in fact typically fraud when prosecuted by the s.e.c. involves what you just said, perhaps a manipulation of

numbers to give a false impression of the fundamentals of the company itself and when it's revealed it impacts the company. they would say it's only because now you have threatened our founder and most important person that shareholders are going to actually be hurt, melissa. but nonetheless, they are seeking what they do typically seek in these kinds of cases, which is to have him be in a position where he could no longer serve on a board of directors or as officer of a company. >> all right, david, thank you david faber back at headquarters with the latest on tesla let's trade this in terms of 10% decline in the and the shares we see number pete najarian what do you think that represents, the notion elon musk is taken off in some way shape or form either by force or voluntary resignation. >> i would say the voluntary resignation is unlikely. i would say by force, i would -- i could perceive that happening absolutely and, you know, the financials are what they've been a long time with tesla obviously. there is a lot of different

things coming into play here but if indeed he is removed i would think this drop is not what we are seeing today i would expect to see more of a drop than we see right now. >> a tremendous drop i do think he will be removed. when they go after this stuff they want blood. they'll get blood. the s.e.c. is not fooling around that could mean what pete's talking about. could be a cut in half spot for tesla. people have been. >> cut in half. >> from current levels. >> there is a 244. he at the end of the cut in half yes i stick by it. >> there is an argument to be made it would be more bullish for the shares if he were removed, because that would remove the greatest uncertainty over the stock. >> no pch i've argued for years that this is a -- like a venture capital investment where you have a visionary founder that has this big idea and it shouldn't be valued on fundamentals if you don't have elon musk then you have to look at a fundamentals and the fundamentals do not support this stock price at all. i don't think this is bullish for the stock. and in any way what so far.

>> and love you, brian love you for the view but i think this long-term view that investors have on the stock is the problem and is that they put blinder on is a and say all i care substitute long-term story i get it meanwhile the fundamentals change every day by the way, i would totally push back on the fact that he didn't have anything to gain. he is the biggest shareholders of the company of course he has something to gain in the long run the challenge of the value of the company if you are looking to sell it, you -- some are arguing out there. >> he didn't sell the shares on the back of the tweet. >> i don't care. >>en a the stock declined. >> he owns the company he is there to basically argue for the value of the company and say i have all kinds of people -- by the way he hadn't even discussed much less confirmed as the s.e.c. quoted in their complaint -- you know, i think this is what you are supposed to do when there are rules and you have to set a standard. >> let's look at top ten holders. when these start to lighten up on the stock i know quarterly filings. >> we have seen that in the latest quarter. >> you have seen that.

and the big thing. because knows are the buyers sitting there owning the bulk of shares so to tim's point. >> so i don't think you are saying. >> they are selling it they are selling it. for me you are hitting a headantened now with the top ten holders the biggest believers in this name. and to brian's point i agree totally. this is a guy that is the stock without him there is no stock. >> right and let's remember he has loaned his shares against this company. there is potentially margin calls out there. and not only that the company has to raise money -- if this didn't happen the company has to raise money. right now who is giving you money? this is not -- no good. >> there has been comparisons made to companies that have been so closely identified with the founders and they turn out fine. and one example is apple and steve jobs steve jobs goes away tim cook steps in and apple hits record high after record high. no problem. >> the first -- but the second

one i think is important to see. >> the second time. >> here is the difference we knew tim cook. we knew the hierarchy. who is after elon musk. >> with a lot of executive departures lately. >> you had a drks in line. all you had to do was sit he helm come up with a couple of good products or stay pat. >> they had a blockbuster product making money. >> it was in good financial health this is not in good financial health. >> people say it's not innovative. >> a lot of people say apple is not innovative ever since they lost the founder, right. but i think the reality is i disagree with that first of all. but second of all if you want to say that, at least you kept the ship going in the direction. it's all about the phone, right? then all of a sudden he started to build out more about the services now the wearables and a all the categories but he had something and continued with what he had. >> toipt bring in phil lebeau standing by at a tesla dealership

and we've talked about what could happen and it looks like the s.e.c. news conference is getting started. let's listen >> the directors of nofrmt deliver opening remarks and take questions. i'll hand it over. >> good afternoon. and thank you for being here today. i'm stephanie eva kichlt an. we are the codirectors of the s.e.c. division of enforcement today the s.e.c. filed securities fraud charges against elon musk, the chairman and ceo of tesla motors. stemming from his august 7th, 2018 statements disseminated over twitter that he was considering taking tesla private. musk's statements misled members of the investing public to believe that it was virtually certain he could take tesla private at a price of $420 per share. which was a substantial premium over the share price at that time because funding for in proposed transaction had been secured. and the only contingency remaining wagon the shareholder vote the market reacted to in

information and tesla stock price quicklily traded up. we allege that the statements were false and misleading because they lacked any basis in fact at the time he made the statements musk had not secured funding for the proposed transaction. to the contrary, we allege that he had not even discussed key deal terms, including price with any potential source of funding. the s.e.c.'s complaint which was filed earlier today in federal district court in the southern district of new york seeks a finding that musk committed securities fraud, an injunction prohibiting him from doing so in future, civil penalties, disgorgement of ill gotten gains and a bar prohibiting muvg from serving as officer or director of a public company in the future let me turn now to the allegations in the s.e.c.'s complaint. the s.e.c. alleges that august 7th, 2018 with at approximately 12:48 p.m. eastern time, in the midst of market hours, musk published a twet to his 22

million twitter followers in which he stated eye a.m. considering taking tesla private at $420, funding secured over the next few hours musk made additional statements through twitter about the proposed going private transaction. a selection of those statements is in the complaint. and among other things musk stated that he would insure the proermts of existing shareholders, that he hoped all current shareholders would remain with tesla, even if it were private and that he would create a special purpose fund for that purpose that no tesla investors would be forced to sell their shares, that a private tesla would in his words be smoother and less disruptive because there would no longer be what he termed negative propaganda from short sellers. and finally, that investor support is confirmed and the only reason why this is not certain is that it's contingent on a shareholder vote. these misleading statements, none of which were precleared or

reviewed by anyone at tesla, caused significant market confusion and disruption within minutes of the first tweet tesla's own head of investor relations questioned whether the communication was even legitimate. investors and journalists contacted tesla and asked whether the tweet was a joke and nasdaq, which requires members to give the exchange advance notice of market moving information but had received no advance notice of the announcement suspended trading for more than 90 minutes following the tweet. the response of tesla's investor relations department is further evidence of the extent of confusion caused by musk's conduct. as alleged in our complaint, over the course of the day on august 7th, tesla's investor relations personnel took musk's statements as face value, reassuring analysts that funding had in fact been secured for the transaction. the investor relations

department told analysts that there was, quote, firm offer, and that the quote -- the offer is as firm as it gets. predictably as seen on the trading charts on the boards next to me, musk's tweets significantly impacted both the price and volume of trading in tesla stock. at the end of the trading day on august 7th, tesla stock closed 379 up more than 6% of the price prior to the initial tweet according to the complaint, musk's tweets were false and misleading for example, his tweets that funding was secured and that investor support is confirmed were simply not true he had neither secured a commitment from any source to provide funding for a transaction, more confirmed investor support in fact, while leading tesla's investors to believe that he had a firm offer in hand we allege

that musk had arrived at the price of $420 by assuming a 20% premium of what tesla's then existing share price and then rounding up to $420 because of the significance of that number in marijuana culture and his belief that his girlfriend would be amesed by it. similarly, musk's claim that the only reason why this is not certain is that it's contingent on a shareholder vote was also false and misleading among other things, a going private transaction would have required tesla's board to approve a formal proposal. but as alleged in our complaint no proposal had even been presented to the board muvg also created the false impression that the terms of the transaction had been settled when as we allege they had not even been explored for example, musk tweeted that current retail shareholders would have the option of continuing to hold their shares, even though he had been told before he published the tweets

that it would be very difficult for retail investors to remain invested in tesla if it were private. and in fact, as he later admitted, there was no way for small shareholders to retain their position in tesla if it had gone private more had musk investigated whether this transaction purportedly to be financed by a foreign sovereign wealth found would require regulatory approvals or be able to obtain them statute despite all of these unknowns and uncertainty was be musk's tweets and blog posts misled investors into believing that it was virtually certain that he could take sfla private after a substantial premium over the share price, subject only to the contingency of a shareholder vote. >> this case demonstrate our commitment to holding individuals accountable for violations of the federal securities laws. a chairman and ceo of a public company has important responsibilities to shareholders those responsibilities include the need to be scrupulous and careful about the truth and

accuracy of statements made to the investing public whether those statements are made in a traditional forum such as a press release or earnings call, or through less formal methods such as twitter or other social media and as we have said before in connection with other matters, neither celebrity status, nor reputation as a technological innovator provide skpufrmts skpefrms from security law these let us sbrouts the and than the team that has worked on this case. they are walker knowle brent smith, barrett atwood, steve bukts. aaron snyder, begin aif choi and begin aif crumpton please bear in mind that because this matter is now in litigation we are limited about what we can say. thank you. >> yes >> stephanie should elon musk be able to remain a ceo while this is adjudicate >> pending a final judgment and determination by the court he

would remain in his position unless he or the company made a different decision yes. >> can you talk about why you moved so quickly in this case? it seems it's quicker than similar cases would normally be. and also how serious are you about barring him from serving as director or a -- >> ben with respect to the speed as i said and stephanie said before we believe our action haves the most impact when they're brought most closely in time to the events that bring them forth we conducted a swift investigation here the investigation was complete and it was time to make a charging decision and we made one. >> yeah, peter schraeder with righted routers does this preclude any other charges against mr. musk or tesla as a company. >> i think we are not commenting beyond what's in the complaint we brought today

>> in the complaint specifically you say that his actions showed that he would do this again. can you explain that a little bit, what transpired that made you think he would do this again? and you think -- >> i don't think we can comment beyond the allegations that are in the complaint >> thanks, guys. >> thank you very much. >> thank you very much >> the stock is off the session lows right now down 11%. the s.e.c. just explained all of the charges and answered a couple of the questions from reporters. one of the questions is can elon musk remain as ceo while the case is being adjudicated. the answer is yes unless he or the company decides otherwise. let's bring in phil lebeau and tesla watcher gene munster phil to you first. what was your reaction about the s.e.c. and what they said? >> well, there is no ambiguity

they believe this is a cut and dried case and the fact that they moved as quickly as they have, the fact that they have laid this case out in what they believe is very clear terms -- now whether or not it gets resolved rather quickly by elon musk and the legal team that remains to be seen what struck me is the tenor of that press conference is very clear. the s.e.c. thinks this is a black and white issue here and they're -- it's a case that they -- they feel confident about. one other thing, melissa you guys were having a discussion earlier about if elon musk -- let's say he steps aside several months while it's under investigation or that he is removed as ceo, what kind of a bench strength does tesla have they have talented people at tesla. that is true but aside from chief technical officer jb strable and the cfo, name anybody else at the company right now? we know a lot of people who have left the chief engineer doug field and other people left.

that's not to say there aren't other talented people. but do not compare the bench strength at tesla right now with the bench strength as steve jobs was ill and ultimately passed in which. night and day difference i think that's one of the things that people will be watching this as it plays out. >> gene, bringing you in kwhar the odds elon musk remains in the ceo job >> i have a different now versus before that press conference i think it's -- it's lower, i would say 25% chance. >> 25% so 75% chance that elon musk is no longer ceo of this company? >> i think -- i think -- well let me take a step back. is that -- this has to be litigated. there is a chance this gets totally acquitted. but what really stuck out is this concept that the s.e.c. -- i mean they just -- they want blood here when they talk about the celebrity status that tells me that's something personal going on here that influences that number. so maybe i need to back off of

that a little bit and say that i think i'm -- there is a much greater chance that he gets removed -- say greater than 50%. leave it at that for now that he removes -- gets removed. but i also want to stress that that is in my book, actually a positive outcome, as crazy as that is. i think his role is best as a product visionary. i think that his responsibilities on investor relations have got us in the mess in the first place and ultimately forces change mels aif, the answer is greater than 50% chance that he gets removed. but i -- as an officer but i still think that there is a 95% chance he remains in a very important and critical leadership role at the company >> this is a critical moment, gene, i would think for the board of directors of this company to prove that they are going to do what is best for the investors base can a board stand by aallow a ceo to be charged by the s.e.c. for fraud and continue in his

role do they have a responsibility at the very least to say, you know, elon, for the time being, you are sidelined. >> absolutely. i don't think the board has the back bone to do that. >> his brother is on the board for one. >> yeah, i think -- i'm in the camp that -- that a couple of the board members should stay. the rest should go but -- so i don't think -- mels aifr i think that would be a normal company that they would ask him to step aside as it's litigated. i don't think that happens in this case. if we come in tomorrow and in fact that has happened, actually as crazy as it sounds, i think it's a positive. because i think that i'm in a different camp with tim who is earlier on the hoe talking about the longer term believers. i'm just a firm believer in electric autonomy and tesla and the technology and so i think that this too will pass. but it's going to be quite a storm before we get to some calmer waters. >> and it's going to pass only if the board handles it in the right way i would think.

let's game it out, gene. let's say you know the bored says elon, step aside. phil is making the point that tesla simply doesn't have the deepest bench, especially after so many executive depart yurs. who in your view could step into those shoes. >> i agree with the j.b. comment. depack is not the person for that the recently recent proposals of jerome gillian head of autos that would be a important role of somebody with the company for a while, left and came back. i think that that's jerome is one person who could fill the role it still isn't the same simple transition that apple had to tim cook nothing can be as good and that's clearly a black mark on the company, that they haven't groomed the leader subpoenaship but keep this mind, take a big picture -- take a step back and look at the big picture here there is massive changes going around technology. and this company zpiel all this

still has a head start i think they will be able to bring talent back to the company if elon is in a more visionary role. >> but gene there is a long ways between now and then you can be a long-term believer in the company. but twaes are what's going on right now and how it's being handled. >> gene, you can't tell me the competitive forces haven't change and technical forces haven't changed dramatically they can't ramp up going mass market for people sit tlg staying it's a great story long-term. i think they miss the fact that the leadership that the company has two years ago has dissipated rapidly. >> one think, i think they are ramping model 3 nicely it did double quarter andy elon musk said as much whether you believe anything back on september 7th. i think the production is moving in the right direction i think that competition is less of an issue here just given how naysant of a market 1% of the

global autos ev today that's eventually 100% i'm a bloefr they have something. but melissa, to your point, this clearly -- i'm taking the perspective of of an investor who has a view of more than one year i think for of an investor who has a view of three months, i don't know how to play this. i don't know how to trade this it feels like there is more negative than positive news. that's my initial gut. i think in time this passes. the storm will pass. but the trading is going to be a roller coaster the next few months. >> phil lebeau, let's bring you in. >> melissa, i want to add one thing gene was talking about in terms of the management team and no comparison between tesla now and apple towards the end of the steve jobs era remember, it was maybe three months, four months ago that elon musk said that he was going to flatten out the management structure. and at the time that was before any of this -- this tweet security- or funding secured business came up

at the time people said are you nuts you already have enough on your plate you're going to flatten out the management structure so more people report to you? in the midst of a number of executives leaving so they're already going through that transition. and now you have this s.e.c. investigation and now charges brought against elon musk. >> gene, let me ask you this question, it seems a critical time, you made the point that competition still is very young. but right now it's tesla's time to sort of prove they've got the gufrpgs to actually execute on the vision is tesla a weaker company, a stronger company, the same company with elon musk underneath this cloud? >> if elon a gone altogether it's a weaker company. would agree with some of the earlier compensatary. >> will that -- dsh will that impact how they execute in this critical period where they are ramping up ahead of big competition or potentially big competition from the likes of a bmw? pure play auto makers.

>> i'm sure -- i'm sure it will have some impact the question i'm asking, will it have enough impact to impact some of the bonds that are due really the critical ones are the ones that are coming in. >> 2019. >> next year. >> yes. >> so to answer the question, melissa i don't believe -- let me word it different i believe they will successfully continue to ramp i think model 3 demand continues higher and that will get to a point to service debt. i think they would be doing better there is no question if any didn't have this circus to cope with >> so, gene, when you just said it as i had mentioned before that i think it gets cut in half without elon musk there. obviously there is a couple of stutter steps before we get there. but without elon musk i do not believe that you have a company. so when you said that it does have far -- more to fall, would you agree with that type of analysis where the stock could get cut in half? i know we are throwing stuff a at a white board having said that on its way down

there, does somebody come in and buy technology from tesla when all of this is happening in the precipitous fashion? >> so, call it a $50 billion market cap now plus or minus that is big number but there are companies with large balance sheets, large ambitions within this space. i do not think the stock can get cut in half. i think it's a wild ride over the next three months as day to day we ride this roller coaster. but i do think that there are two things going on. number one i think they continue a leadership role, assuming that elon keeps a role at the company, i think the company will continue to be successful not a board roll or a chair role but separately i think that bed bid -- the other bid out there it's hard to quantify is it $30 billion? i always fall back to other companies. totally different business for

$20 billion. i'd rather own tesla for $30 billion even with the debt they have than what's app for 20 billion. a case of one. but i think there is definitely this back stop that can it spoerpt shares from free fall. >> tlrt. gene, why don't you stay there just want to get the quick reaction in terms of the trade here, if there is one in your -- >> i do think there is a trade we flow it's volatile. i'm more in grasso a's camp you don't truss it until it's 180, 140. that's where the support it. what i'll look for is if it drops like that elon musk is pushed out and then all of a sudden we get news that perhaps somebody who can run the auto company is coming in, at that point then i'm g getting more bullish on it. with you i don't think that happens until 180 or 40. we got a rung way to go. >> retires get to phil rhee be statement from elon musk, phil. >> here it is. elon musk issuing a statement a few minutes ago. saying the unjustified action by

the s.e.c. leaves me deeply saddened and disappointed. i have always taken action in the best interests of truth, transparency and investors integrity is the most important value in my life and the facts will show i never compromise this in any way melissa, i don't think we can get a whole lot out of that statement aside from what you expect from somebody charged by the s.e.c. with fraud to say essentially, look, i don't know why this charge has been brought against me i don't think it's justified i've only had the best interests of the company in mind so it's a little hard from just this statement, melissa, to read much into it in terms of is elon musk fighting mad and he is going to go to the mat against the s.e.c. >> or is he thinking about some type of resolution. >> i think it speaks volumes that he released a statement in the traditional manner as opposed to tweeting that statement out. >> yes. >> i mean, honestly, you might think i'm making a joke. but i think that. >> no. >> it shows perhaps he is

reconsidering how he uses twitter. yoend. >> you could be right about that you could be right. >> couldn't you, though, phil or the desk claim that you're sorry that this case has been brought and show at least some sense of not complete defines to say that it's unjustified, first of all means you only get the dander that much further up at the s.e.c. pointed out by you i think it's totally right fifl. this is a celebrity guy put in their face the 420 number he mentioned 22 million twitter followers. they know this guy has reach don't you think elon musk could have been more conciliatory with his lawyer's blessing without admitting anything >> sure, he could have been. but a that's not his style he is never somebody who is going to throe out the conciliatory tone very often vekd of all if elon musk truly believes this is a case he can win, then he has put on the

statement out there. now i know a lot of people listen to that after seeing the s.e.c. press conference and say, look this seems easy for the s.e.c. to win in case. he would be crazy to fight them. elon musk is somebody who may honestly believe that he can convince his legal team, look we can win this and here is why we can win this >> all right phil, thank you. we'll check back in with you and gene later on in this hour as we stay on top of the big breaking story again in case you are joining us the s.e.c. charging tesla founder and ceo elon musk with fraud the stock now 10.6%. off the after hours sessions lows infamous show short settler filed a class action lawsuit against tesla. andrew left. is he still short of the stock what does he think of what muchk is facing. plus james stewart also here in weigh in on what happens to elon muvg tis"w rk the bombshell "neyo me swrf with muvg a few

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his tweets that funding was secured and that investor support is confirmed were simply not true he had neither secured a commitment from any source to

provide funding for a transaction, nor confirmed investor support >> that was the codirector of enforcement pennsylvania at the s.e.c. talking about the charges against tesla ceo elon musk. we have andrew left on the phone short tesla. earlier this month he filed a class action lawsuit against tesla. andrew great to have you with us thanks for phoning in. >> hi, mels aif, what's happening? >> at any point we are about down about 11% in tesla shares are you still short the stock? i wonder if at any point it's a long. >> i don't think it's a long i think it's a difficult short i wonder now if elon musk gets removed at ceo is that a positive or negative for the company? who knows right now. i'm surprised that its shareholders are shocked he gets charge of course he was getting charged by the s.e.c if you lie you get charged by the s.e.c. to me that was obvious for the market react like this it only shows they think a halo

existed that you know no one is above the law. >> you know it's a difficult short. does that mean that you are considering or that you have covered? >> yeah, i mean, mels aifr it's not about my position right now. elon musk was just charged by the s.e.c. for fraud he referred to me at infamous. whatever small position i might have the stock is irrelevant. what's more relevant is the future of tesla right now. and where does this take the company? i'll say one thing short sellers always thought the best thing they had was elon musk and shareholders thought the best thing they had was elon it's the battle of the good versus theed about and see what happens. >> it's interesting you made the statement because the fate of the company and elon musk is the concern of short sellers and investors isn't it when you short the stock as you said you are factoring in as muck as a risk factor. it's not just my position doesn't matter you are think bag this that's why we asked you the questions. >> i think the s.e.c. charge is -- i mean, who cares?

i knew this was going to happen. it had to happen i would be more concerned about how he has acted on conference calls, the fact he did in the first place, whether charged or not i think everyone knew it wasn't true. so you know what happens to the company if elon musk stays on as chief visionary and they hire a operator does the stock go up or down. >> maybe people will judge the company on the merits of the company and mot musk but i didn't think this was effect on the defining moment making people wake up and say he is a loose wire. he has been a loose wire for a long time. no one needed the s.e.c. to tell me that. >> pete najarian the catalyst is out. you are waiting to see what would happen the stock is down significantly. is it time to cover in your opinion then it sounds like that's what you are saying >> it depends on your risk tolerance. people are short the stock for different reasons some are people long the stock.

everyone who is short the stock says, it's a money losing car company it'sgoing to continue to lose money and slow demand. people owning the stock think elon is the visionary and a small setback in a greater story. in that case it's the most overdiscussed topic out there. but, the key thing is i don't why people are surprised we he made the statement it wasn't true the s.e.c. had to charge him it's not -- every ceo you couldn't be a short sheller. every ceo could come out saying they are thinking of going priefrt. it's not a shock that this happened. >> andrew we leave it there. thanks for phoning in appreciate it andrew left. >> bye. >> >> he hit a good point is it good or bad if the ceo is removed after hearing the briefing. >> this ceo after hearing this ceo it's a different thing this is a stand alone company. >> this is a ceo i'm not sure how the stock would

trade. >> i'm pretty sure -- i hear you there is a 26% short interest. you could get a. pop off of this with the action people saying it's a near term positive we get him out of here. it's some accountability i don't think you are going to have a lasting pop and once these little bit of supports end you talk about a fall on the support that's him. >> getting the technical analysis todd gordon of trading analysis.com is here what do you see. >> i was just talking to mike co off camera talking about the expected move as of closing at 307 the plus and minus one standard deviation which is where options market see it falling 70% of the time was $38 subtracted from the disclosing price which is 307 if you do rough approximation, that gives you the low so far. so what you'd say is this is not overly excessive in terms of oversold on the technical basis. so 270 if we hold, fine.

let's look at the longer term since ipo get the technical perspective of where the is to stock has come and the impressive that we have seen so this is from ipo. very nice work there we can see the stock has had a very, very nice smrkles in a weekly clarity here. go to the daily. and what we are doing -- we clear the chart. there we go. we are supported from the recent lows pep we have had attacks on the short side, trying to get threw the 240, 250 level not able to. that expected move as i mentioned at the close acts as support. b.k. was saying he wants to get him down to 180, 150 you have a lot of wood to chop, a lot of floor to break through the 240, 250 to get him down there. right now the stock looks

technically supported. >> all right technically supported. todd, thank you. todd gordon trading analysis.com pete najarian. >> yeah. >> what activities have you seen in the options market. >> playing it both ways. mostly more positive than to the nchgt side because i think people anestheticed to see something that would be a klgtsist pushing it higher not knowing when this type of report was coming out but knowing somewhere in the future. i still -- i'm a little frustrated with the answer from andrew left. it seems to be the catalyst he looked for has come and gone it seems to me you close a position. >> does that mean you think the worst case snoefr for tesla has happened the worst is behind them. >> here the problem i have i've been watching this forever. watching people leave, leave, leave, and i don't see the hierarchy. who is the next person i mean phil lebeau brought up a couple names, maybe two. but even that is that impressive enough to take a shot on a company who has somebody else at the helm, not elon musk? i don't know.

>> as we we have danced around are you long the stock because of musk or short the stock because of elon musk is he at this point the guy that's -- you're most concerned about? i think bottom line it's elon musk is gone, the stock has more room to go, not necessarily now because we have something to play out but there is no question that people have believed in elon in a way that they have believed in other visionary leaders and they have been able to overlook a complete lack of operational accuracy in terms of what this company or execution even though they built great cars and whatnot and not deloerns. >> we don't know -- let's say they brought somebody. we don't know who it is. there is nobody we know of waiting in the wings we can't name one or two people coming from the outside to come in the board of directors has shone no leadership at this company what so far. many people calling for them to be gone, all of them.

>> kenle. >> his brother is on the board maybe his brother takes over the point being all these things can happen but there is nothing waiting in the wings. >> the stock is not trading on fundamentals has it traded on fundamentals or elon musk. >> elon musk. >> to be fair it's a combination. it's a combination it's not fundamentals it's the vision. >> the vision. >> and a great part of the vision is held by elon musk. >> right i would argue all the vision is elon musk. >> if you had to bring it down a percentage, it's probably 90% if not more i'm holding back a little more 90% elon musk. >> could somebody buy the company and take the intellectual property and do something with it? of course there is a tremendous amount of asset base here. >> to going to's point at what price. >> at what price. >> at what price. >> could a company come in and buy tesla now. >> not right now but maybe in 30 billion, $25 billion steve grasso as $150 price. >> yeah, why not at this

valuation. >> >> huh. >> that means we are only thinking about car companies buying the company. >> right >> exactly. >> when really -- i mean the field is a field -- >> maybe what happens is -- >> does google take out some piece sns does alphabet come out and take pieces of the autonomous do they take out some pieces or is it a carcass hunt at this point? not a one size fit into the box take all, winner take all. >> there is of an important distinction to make too the s.e.c. is charging elon musk as an individual and not charging tesla yet. >> did you think that was interesting in the press conference, because ultimately when asked they almost seemed like they -- they weren't ready to discuss it. but they certainly didn't rule it out. >> rule what out. >> that the company could also have an indictment and i thought that was interesting. >> in the early days of the investigation for more on the story let's bring in "new york times's" jim stewart cnbc contributor great to have you. the last time i spoke with you you had written the article with

colleagues after interviewing elon musk after all of this had happened i'm curious, did the s.e.c. contact you? were they looking for tapes in any way? >> no, i haven't heard a word from the sesk. we are journalists, not law enforcement. there needs to be a strict church and state there if they want to know things we know we put it the newspaper and they can do what they want with it i did find his statement today -- first of all the charges are amazing to me because it wasn't just like one or two of the tweets were false. it was like every single one that day had materially false information on it. which to me then -- and then his response i think is troubling in that it seems a little bit delusional if you read the s.e.c. complaint, almost all the evidence they cite for the fact that it was false came from the interview with elon musk he is quoted all over in there having told them, no i never talked to anyone about it pl i thought it would ames my girlfriend. >> those are his -- >> those are his words in the complaint.

how could he now look at the complaints and say it's unif you founded when he is the source of almost all the evidence. that's another reason they were able to move quickly they interviewed him and interviewed the directors i'm sure there are no facts in dispute here so i don't see a defense here. i think he has -- he and his lawyers have got to get fl and start settlement talks now one of the biggest pieces of leverage is the willingness of elon musk to step aside. that would almost inevitably be part of the settlement deal. >> step aside in what capacity could he still be at the company, still be an officer. >> typically banned from being officer or director from any public company for i think martha stewart out five years or something like that. it would be -- i think something in the that neighborhood and that that might be part of it but he could still be an adviser, still a large shareholder. still an important presence there. he just can't run the thing. and he can't be making unauthorized public -- material

public statements lake this. it's amazing that -- maybe one reason they haven't charged tesla is that nobody else knew anything about it. >> right. >> did you think that it seemed odd and maybe seemed the s.e.c. would be less likely to come to a deal with elon musk, the fact that they said something to the effect of his status as a celebrity ceo and tech innovator doesn't exempt him from following the law. i thought that stood out -- it was like underscored for me. >> absolutely. i think first of all they needed to say that from a law enforcement perspective. you get a celebrity defendant like this. it's incredibly valuable in sending a message to the rest of the world. everyone is paying attention to this case. this is setting of an example for every other ceo that they have any regulatory authority over who is going to be watching in carefully so, yes, he is getting intense scrutiny and they want to make an example of him given what appear to be the egregious facts. which again to me goes to the

very important question they haven't addressed yet. under what circumstances did he issue the tweet in we reported in the story he was apparently driving alone in his car to the airport and he starts firing off you know a takeover bid for the company. who does that? even the s.e.c. -- we treat it like a rational act. i don't think it is. there is something else going on here and i'll be very interested to know what those things are because that goes to the question should he stay and in what capacity? you know, he appears to have smoked marijuana on a nationally televised blog not that long -- after all this when he knows he is under public scrutiny a lot of investors i think are concerned. which goes again, should he leave? i know directors who want to find a way to force him to take a break. >> directors at the company. >> yes. >> and are they the independent directors or also. >> i don't want to get into kmkt who. but i know absolutely there are

directors who want him to take a break. they feel he needs to take a break. and they've been looking for a face saving way to do it this maybe the perfect opportunity. >> i want to bring in jim cramer jim a talking at the bit to talk about the charges against elon musk jim what do you make of this situation. >> listen, my friend james p stewart i keep coming back to the notion the man is erratic be unstable he should not be right now running a public company i think it's time for medical leave of absence or some sort of leave of absence where they can figure out what happened to him. you can't say and do the things he is doing and expect to be able to run a public company jim, when you saw him recently, i mean you have interviewed him. you did the great "new york times" piece this is not a rational man >> well, he himself -- i did a whole column on this he himself has alluded to whether he might be on the spectrum of bipolar or manic depression or something like

that i don't think there should be any stigma about a are about that many people have this. it's treatable but if that's a factor here i think it's time for it to be addressed. i agree with him jim on that. >> cramer question for you. >> shower. >> you know let's say elon musk steps aside how does the stock trade. >> we are wondering the reaction. >> well the man always does get a pass but tlaeft he was there when he gets a pass. i have to tell you if this calls into question the thing people most love about the stock, not that they don't love the car obviously is the man himself i think if the man himself has to step away if the s.e.c. pursues this successfully will make it oh so that this stock will finally get what the bears have been saying would happen all along. it will take a real be, real swoon. >> 12% decline does not reflect the potential outcome. >> there is a lot of people jim knows better than anyone very unsophisticated about the s.e.c. can do and justice department can do but jim if they refer to justice

and justice prevails, do you think that people loving the stock endlessly can love it as much as they do. >> no. you are right about that i know plenty of investors who they're not sophisticated investors. they love elon they love the story. they have total faith in it. and jim, you bring up a good point about possible criminal charges. we are not- it's not clear yet they're out of the woods on that when i read the s.e.c. complaint over and over again they talk about how upset he was with the short sellers. i'm reading along -- every one of the references i see mot of, mot of, motive what they have to algonquin a prove in a criminal case is that he intent, intent to manipulate the stock for an unacceptable purpose which would include punishing the short sellers. and i notice in the s.e.c. charges those facts don't have anything to do with it it's just about false statements you don't need to say why you made the false statements. but over and over in the complaint they talk about his upset -- how upset he was with the short sellers. for me that lays the groundwork

for a mot nef a criminal case. >> jim was talking about the smaller investors and granted they are important but the institutional investors are most important. these have been longtime shareholders of tesla shares, traded in and out and but kept mainly large positions, jim. you know if you're a at a fie dilt, name the growth fund out there holding tesla shares, can you do that with the s.e.c. charged for fraud and tell the investors i'm standing by? melissa, i think it just got wishful. it wasn't wishful before this. it was, listen, you got -- you small minded people worry worrying about the balance sheet and worry about whether they make the monthly numbers, you are just mall in thinking. suddenly the guy directing the company and is more the company than any other ceo i know, let's say he has to step aside, these people have to answer to other people within the companies. and the other people will say,

it will be the elders, what are you smoking? jim with. >> enough said. >> thank you, it's great to get your analysis on this. i know you got to get ready for your show in you a minutes see you at the top of the hour on "mad money." >> thanks melissa. >> enjoy it out there. here on the desk, what do you do. >> one important thing we haven't talked about yet is in the complaint they talked about invest relations at tesla saying we have a dole, the fund something secured when they knew they didn't have anything we don't have a charge against the company yet. but that is another shoe that could drop, and i think investors will run for the hills seeing that. >> i think the point we made today, it's important -- and i know i made it a long time fundamentals on this company i think are challenging. and everyone else has said, okay, great it's a big tech story. it's a trillion dollar idea. >> and it is. >> it was. >> if you renew -- there was a trillion dollars of risk before? i mean, just -- but fundamentals

without this news, this company was a sell. >> the next earnings at the end of october you have plenty of time. >> we get deliveries in the first week of october. we get a benchmark. >> deliveries go into that. >> let's say the deliveries cover off the ball, pete what do you think. >> which they may be, i mean going into the whole thing but i think the reality for me right now mel is this is something tim is right the fundamentals are never in there. but they were buying elon musk, the story, the idea of what it is behind the curtain so to speak. so i look at this in one other way though they lost doug field if there is somebody stepping in to be there. here is a guy went from apple and tesla to back. >> he took on a ceo job at the lyft. >> you got to find somebody. he was in charge of manufacturing and production. >> how about this, if they beat on deliveries it doesn't matter the sfok is still ashort. >> it doesn't matter. >> at this point there is too much. >> it doesn't matter the only reason they beat on

deliveries is because elon was sleeping in the factory. who are you getting to drive this thing like that i don't think the deliveries matter anymore i've been one of those saying you buy because of elon musk i agree with tim the fundamentals are not there elon musk is gone. there is nothing to the company. maybe there is a little bit. >> by the way, the fundamentals -- you had to buy solar city if solar city went bankrupt elon musk's bloom would have been off the rose earlier. >> the board has been looking for someone to come in and help him. and they have gotten no where. i mean, nobody wants to go into this situation and i still think until they clarify what the relationship would be with elon, who in their right mind. >> i would imagine it's a place nobody wants to report to elon musk. >> yes or to the board that he essentially has controlled. >> right. >> until that's clarified i can't imagine any highly talented, effective manager wanting to step into this mess >> have you contacted elon musk

to see if he would do an interview you? you never know. >> you never know. by the way i'm sad about this. i love the cars, driven cars this was a huge success story. it's so self-inflicted >> it's a great american technology story. >> he is a genius. it's upsetting watch it transpire. >> painful yet at the same time in all my years of reporting i've never seen anything like the series of tweets this was crazy, from top to bottom i can't think another takeover offer remotely like this in my decades of reporting >> jim, thank you look forward to reading the next column. >> sure. >> all right in lieu of final trades where does tesla trade tomorrow. >> lower than right now. >> lower than 12%. >> 255 is the next supported trade at 267 right now. >> all right >> i think lower when people raeltz there is more to it. >> lower than down 12%.

>> my view is lower before today you know what it is now. >> all right that does it for us here on fast see you back here tomorrow at five and mchld with jim cramer starts from san francisco with jim cramer starts right now. ♪ >> hey, i'm cramer welcome to "mad money. it's i'm here in san francisco welcome to cramerica my job is not just to entertain you, but educate and teach you, so call me 1-800-743-cnbc. at the end of the day, investing is about searching for good stories. we