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THE HEADLINES

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LAWSUIT SECURED

Tesla shares were down 11% after news broke that the SEC is suing CEO Elon Musk and the company itself for fraud and seeking to have Musk removed as CEO. The charges stem from Musk’s tweet that he’d secured funding to take the company private.

Soon after Musk’s tweet, Tesla stocks shot up 11% as investors scrambled to lock in below the $420 projected take-private price. Musk claimed that he was in talks with the Saudi sovereign wealth fund to actually make the move when pressed.

According to the complaint, Musk had sent the tweet even though he hadn’t discussed the plan with investors. In fact, the complaint alleges that he knew it wasn’t even possible. But the best part of the documents filed in a Manhattan court? That Musk chose $420 because of its significance in marijuana culture (and to impress his girlfriend). You can’t make this sh*t up, folks.

In addition to being removed from Tesla, Musk would never again be allowed to hold a corporate officer or director positions at any public company, if the SEC gets its way.

Water Cooler Talking Point: “Welp, I guess that settles it, we can be held accountable for things we say on social media. If you need me, I’ll be scrubbing my Twitter feed dating back to 2009.”

 

TOP GUN

*Cue the Kenny Loggins*

Boeing outdueled Lockheed in a $9.2B dogfight. The Seattle based aerospace giant won a 10-figure contract that will give it the honor and privilege of manufacturing up to 475 Air Force jets which will hone the next generation of Maverick’s to buzz the tower. Because, nobody likes Iceman.

The deal completes a hat-trick of Pentagon W’s for Boeing. The latest three comma contract comes on the heels of a $13B deal to build MQ-25 refueling drones and a $2.38B Huey helicopter order. Partnering with Uncle Sam will bolster Boeing’s defense division which made up only 23% of revenue last year, down 50% from 2010.

But putting a boot in the ass of America’s foes isn’t Boeings only business. As part of a joint venture with Lockheed Martin, called United Launch Alliance, Boeing awarded a Vulcan Rocket engine contract to Jeff Bezos’ Blue Origin yesterday.

Water Cooler Talking Point: “Anyone else got the need, the need for speed?”

 

COOL STORY BRAS

Petróleo Brasileiro SA, aka Petrobras, Brazil’s semi-nationalized oil company, agreed to pay an $853M settlement related to a massive bribery scandal. The investigation by Brazilian and US prosecutors began in 2014.

Petrobras’ board admitted that executives were making illicit payments to Brazilian politicians and political parties dating as far back as 2004. As a result, said politicians wouldn’t launch investigations into the billings of Petrobras. At least 4 of the company’s top executives were convicted of bribery and sent to jail, and even former President Luiz Inácio Lula da Silva did some time in Brazil’s Clube Fed.

$682M of the fine will be distributed to a vaguely defined “Brazil fund,” for promoting corporate transparency, and the remainder will be split by the US DOJ and SEC.

It appears that investors liked the deal. The stock price rose 5% yesterday.

Water Cooler Talking Point: “As any good corruption scandal fanatic knows, the key ingredient to successful fraud operation is outrageous construction bills. Yeah, I watch Ozark.”

 

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IN OTHER NEWS

• The iconic German industrial giant Thyssenkrupp plans to split its struggling business. Thyssenkrupp Industrials, will keep the companies elevator, automotive and plant construction businesses and Thyssenkrupp Materials, will run steel, materials trading, and steel-related processing operations. This is arguably the largest corporate breakup since Left Twix and Right Twix went their separate ways.

 

• How do you say “Robber Barron” in Korean? Lee Sang-hoon, the board chairman of Samsung Electronics, has been indicted on charges that he meddled in labor union activities. Mr. Lee joins a litany (32 to be exact) of Samsung execs on trial for alleged union labor sabotage. In case you were wondering, this is completely unrelated to the major scandal that rocked the company in 2017 which ultimately led to the impeachment of South Korea’s president.

 

• JCPenney’s CFO Jeffrey Davis will resign effective October 1st. The current VP of Finance will take over in the interim as the company searches for a replacement. The company’s internal job description requires a candidate to have a “keen understanding and ability to assess and interpret largely negative profit margins.”

 

• The DEA has classified a cannabidiol (read: devil’s lettuce) based epilepsy drug in its least restrictive category. This brings GW Pharma’s drug one step closer to commercial release. Pot stocks soared on the news. What bubble?

 

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