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Short thread on what the @SEC_Enforcement should do to prevent a whole bunch of more $NKLA ‘s from duping retail investors:
The key is to go after Girsky not Trevor
To understand why - brief background on how SPAC’s work and why they encourage fraud
The key is to go after Girsky not Trevor
To understand why - brief background on how SPAC’s work and why they encourage fraud
A SPAC is a blank check publicly traded entity created w the purpose of acquiring and merging w a private company thereby taking the private company “public”
This is a quick and easy way for a private company to raise a decent amount of capital and gain access to public markets
This is a quick and easy way for a private company to raise a decent amount of capital and gain access to public markets
Because the private company (our case $NKLA) is bought by a SPAC (our case $VTIQ) NKLA is able to avoid much of the scrutiny and disclosure normally mandated of companies doing a traditional IPO
Instead it falls on VTIQ (in our case sponsored by Girsky) to do due diligence
Instead it falls on VTIQ (in our case sponsored by Girsky) to do due diligence
Herein lies the problem - Girsky has 24 months to acquire a company or he loses his SPAC
Girsky also gets founder shares - essentially a whole load (often ~6% of outstanding shares) of shares w a few cent cost basis
This means if Girsky successfully get a deal done he stands
Girsky also gets founder shares - essentially a whole load (often ~6% of outstanding shares) of shares w a few cent cost basis
This means if Girsky successfully get a deal done he stands
to make hundreds of millions of dollars
That is the case no matter what company he really acquires or how well it ultimately does
All he needs is retail shareholders to keep up the stock at even a few dollars till he’s able to sell
That is the case no matter what company he really acquires or how well it ultimately does
All he needs is retail shareholders to keep up the stock at even a few dollars till he’s able to sell
The problem w this is that the incentives are totally perverse
And this is how we end up with a company like $NKLA that couldn’t raise private money because as Trevor says they thought it was we-work being instantly worth $15B overnight with awful disclosure
And this is how we end up with a company like $NKLA that couldn’t raise private money because as Trevor says they thought it was we-work being instantly worth $15B overnight with awful disclosure
What the SEC has to investigate is what did Girsky know when he dumped $NKLA on public investors
There will always be overly ambitious Trevor’s and fraudsters the question the SEC must deal with is why so many all at once are worth billions of dollars
There will always be overly ambitious Trevor’s and fraudsters the question the SEC must deal with is why so many all at once are worth billions of dollars
It’s not just $NKLA take a look at the others fisker canoo virgin etc there are loads
And there are laws these sponsors had to follow regarding proper disclosure
It seems very likely they didn’t follow them - will the SEC send a message?
And there are laws these sponsors had to follow regarding proper disclosure
It seems very likely they didn’t follow them - will the SEC send a message?
