All stock exchanges have regulators, they are seemingly ensure there are some ethics in the buying and selling of securities, understanding if a broker works on commission to raise commission means more trading. Some securities have very low commission, some securities have have higher commissions and when a broker is disciplined it is often in the higher commission securities. For most investors, buy and hold quality stocks is the method to gain wealth over the long term, but everyone who buys and sells wants to have the big gain almost immediately. Having said that often times, those that run the securities and exchanges will point to the quality of the regulators as one of the reasons why investors should feel comfortable trading on the exchange.

If an investor particularly an investor who holds directly and indirectly a large holding makes a statement about their holding and the stock either goes up or down, it will come to the attention of the regulators. There is a principle that all investors should have information as reasonable soon as possible, this is why companies release press releases to state their earnings at a particular time – usually before the exchange opens or after it closes. It this fashion investors can read the releases and act accordingly. Do the results match expectations?

Elon Musk of Tesla loves to tweet and that can be very good, except he sometimes tweets about the value of his company. As the President and largest shareholder what he says is material, he has tweeted maybe I will take the company private? Taking a company private is always possible but it implies he has the financing to do it and will do it at a premium to the stock price in order for the investment companies to buy the shares for the company. If he wanted to take the company at a lower price, investors would demand a premium and not sell. The tweet has financial implications.

In an article from Reuters, Telsa has received its 2nd subpoena from the SEC about his tweets. Likely he will receive more about his proposal buy out of Twitter. A subpoena means Mr. Musk and his lawyers have to testify under oath to investigators from the SEC. They will make recommendations on penalties and normally there are both financial and trading suspensions. The company said it will co-operate with the SEC – arranging both time frames to appear and documents requested.

Linking to dividend paying stocks, there are rules for the bigger players in the market to be fair to the smaller players. If you one share of a company trading in the hundreds of thousands every day, you can have a view but it will not change the outlook of the company. If you own a hedge fund and accumulate over 5%, your views will be heard by senior management because it could sway other shareholders. If senior management which typically has over 50% of the votes at the Annual General Meeting says something about the company, it needs to be widely told or it is inside information. The regulators are there to ensure the large companies have good ethics and the do not do the same thing as the fly by night security firms.

There are more questions than answers, till the next time – to raising questions.