What Could Have Possibly Motivated the SEC's Sudden Investigation of Elon Musk?
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There has been great hope for civic liberty in the days since Elon Musk made the bid heard round the world (discussion of which is not yet banned on Twitter) to buy that company for $43 billion – a substantial premium over recent stock prices.

The company, of course, authorized a poison-pill defense, preferring the personal power of its executives and their minions to censor public debate over its responsibilities to maximize shareholder value. Well, you know, the insurrection of the corporate executives.

More interesting were the stirrings a few days later at the Securities & Exchange Commission (SEC). Just as Musk threatened to make Twitter an open-speech platform again rather than a walled garden whose gatekeepers promise to discriminate constantly on the bases of race, sex, orientation and political leanings – in other words, discriminating in just the ways that support the Biden Administration and SEC Chair Gary Gensler and their agendas – the commission has suddenly found motivation to investigate Musk.

As the inestimable Charles Gasparino reports, “the Securities and Exchange Commission and now the Justice Department have launched a joint investigation into Musk’s business activities, a source close to the matter says. Exactly what they’re looking at isn’t known, but here are some clues: Lawyers say he didn’t file the right paperwork when accumulating his 9%+ stake in Twitter; he may not have come clean early enough on his intentions to try taking over the entire company.” His and other reporting suggests that this joint investigation involves other matters as well, but it’s not clear if these are new matters or the revitalization of previous contested government interference with Musk’s activities.

There appear to be three ways to interpret this conveniently timed intervention. The first is that this is just a normal little investigation that been blown to national attention because everything about Musk gets significant attention, and because the left has lost its mind at the idea that the people who own Twitter might allow dialogue that stalwarts of the left cannot control. (Witness in this regard the absurdity of Bezos Blog – er, Washington Post – “talent” intoning that democracy would suffer if there were more free expression and open debate at Twitter in response to the ideological predicates of a billionaire owner. Apparently democracy thrives in darkness, as long as lefties like Bezos rather than speech libertarians like Musk control the lighting.)

The remaining possibilities both hint at SEC (and DoJ) corruption. Reuters reporting suggests that if Musk screwed up the paperwork, “Securities and Exchange Commission regulators could use any shortfall to try to punish Musk more for other lapses, some believe.” This, of course, is not how free and honest government is supposed to work. This government has declared that “equity” is a “whole of government” commitment. As has been discussed in these pages before, equity theory is shot through with all sorts of invidious discrimination, but in its practical effects it forbids considering previous records or related proceedings even when deciding whether to release violent criminals to go out to commit more crimes before trial. If these arrangements only apply in some cases, while in other cases it’s ok just to “get” someone for anything you can, ethics be damned, then this administration is corrupt.

The next corrupt possibility is more stark. It is simply that the real “whole of government” goal is to shut down debate and the distribution of facts that challenge this administration’s assertions. That would straightforwardly violate the First Amendment. It’s unconstitutional when the government does it, and it’s unconstitutional when the government partners with non-governmental actors to do it.

If these agencies are ramping up investigations against Musk, or treating a file-clerk error as though it were a uniquely big deal, in order to threaten Musk and other speech-favoring billionaires away from buying Twitter, then the real insurrection against the United States government and against “our democracy” is coming from inside the (White) House.

It’s impossible yet to know which of these three motivations is correct (though it may be time to see if anyone can find Sam Ervin right soon). But we certainly have a lot of circumstantial evidence.

A few weeks ago I considered the deep and inappropriate bias that animates the SEC’s proposed rule regarding greenhouse-gas emissions. The commission may as well have turned the whole process over to Mike Bloomberg and other deeply conflicted climate catastrophists. Evidence constantly grows that U.S. corporations have effectively no ability to change carbon-emission or global-climate trajectories. Foreign developments make it ever more likely that the rest of the world will never join us in this project, while the climate-catastrophe crowd unwittingly tells us to turn our attention to better solutions, because only ever-more-drastic action on ever-more-impossible timelines can make a difference. But none of this matters to the SEC, which has proposed a rule that would effectively force companies to ignore political, scientific, technological and financial realities, and to decarbonize according to the administration’s purely political schedule.

Politics are the motive force behind other major Gensler-era SEC proposed rules. The SEC has approved a NASDAQ rule that would force equity-based discriminatory hiring rules (hiring by race, ethnicity, sex and “queer” status) on corporations, starting at the board level. This is very likely unconstitutional, and surely violates the SEC’s statutory remit, in that the rule is by admission not justified by demonstrated company value effects. Rather, the motive is, again, purely political.

The case is the same with a proposed rule that would pressure investment houses to vote their investors’ shareholder proxies for shareholder proposals that would skew hard left, and then would excuse the houses from having to explain or justify those votes. All of this is achieved by manipulating reporting categories and providing information to shareholders that is purposefully opaque rather than clear and helpful to those shareholders. This violates the SEC’s core duty, but it helps this administration’s radical agenda.

A similar rot infests SEC investigative proceedings other than the Musk matter. In recent weeks, in the course of a suit led by the New Civil Liberties Alliance against the commission for abusing its adjudicative and enforcement power, the SEC found itself obliged to admit that – whoops! – it has abused its adjudicative and enforcement power when its in-house prosecutors inappropriately invaded the province of its in-house judicial staff to peruse inappropriate documents. It is both ludicrous and unconstitutional for agencies to have both judicial and executive powers in house, and the appropriate agency response to this inherently dangerous setup should be absolute rigor in procedure and process. Instead we see evidence of what sure looks like either (paging Senator Ervin!) a high-tech, third-rate burglary – or instead a coordinated subversion of law and the pattern-and-practice of corruption.

And finally for today, a glimpse into the SEC’s process of reviewing proposals submitted by shareholders to corporations for other corporate shareholders to vote on at annual shareholder meetings. Under the Gensler SEC majority the staff has changed the rules to make it far easier for shareholders to get proposals on proxy ballots, secure in the knowledge that more than 90 percent of them, for now, are submitted by the far left. One of the relaxations of the rules was to allow virtually any proposal dealing with “human capital management,” especially with regard to proposals dealing with discrimination. All of those got through – except one. Lo and behold, the one that the SEC staff allowed a company to exclude: a proposal that asked BlackRock to study the advantages that would arise from adding “viewpoint” to its nondiscrimination policy (i.e., to bar discrimination on the basis of viewpoint, to make the rules the same for everyone). On racial, sexual and other woke grounds, proposals calling for active and aggressive discrimination in favor of the “diverse” were inomissible. But a request that BlackRock stop discriminating on the basis of viewpoint? That was right out. (Disclosure: I direct the organization that introduced that proposal.)

Now I ask you, what could have motivated this sudden swerve in SEC rule application? Could it be that the current commission affirmatively favors viewpoint discrimination – so long as it can force perpetual corporate obeisance to hard-left political commitments through all of its rule makings and investigative and enforcement actions?

After all that, and to get back to Elon – what do you think: coincidence, or corruption?

Scott Shepard is a fellow at the National Center for Public Policy Research and Director of its Free Enterprise Project.

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