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Will VW Face Regulatory Scrutiny Over It 'Voltswagen' Prank Like Elon Musk Did For His Tweets? (cnn.com) 54

Posted by EditorDavid from the oh-fahrvergnugen dept.
Volkswagen's early April Fool's Day prank (pretending to re-name the company "Voltswagen") "may have put the company at risk of running afoul of U.S. securities law by wading into the murky waters of potentially misleading investors," reports CNN: "This is not the sort of thing that a responsible global company should be doing," said Charles Whitehead, Myron C. Taylor Alumni Professor of Business Law at Cornell Law School...

Volkswagen is indeed investing heavily in electric vehicles, but confusion over the name change could prompt scrutiny from the Securities and Exchange Commission or litigation from investors who feel misled by the joke. The Securities Exchange Act prohibits companies from making false or misleading statements to investors... Quipping about the status of a business that Volkswagen is positioning as more environmentally friendly also could irk investors, especially in light of the 2015 diesel emissions scandal the company has been trying to put behind it.

"Will the SEC inquire? Well, of course they will," Whitehead said. "It's gotten enough publicity and people are concerned about it and there are issues about whether or not companies should be doing this that I'm sure [the SEC is] going to make a phone call." A representative from Volkswagen's headquarters said Wednesday afternoon the company had not been contacted by the SEC. The agency declined to comment on the matter.

There is precedent for the SEC taking action against cheeky statements regarding big companies. In 2018, Tesla CEO Elon Musk settled with the SEC for $20 million after the agency said his tweet about securing funding to take the company private at $420 a share — an apparent joke about weed — misled investors...

it didn't help that the statement announcing the purported name change included no reference to April Fools' Day — and it landed two days before the holiday... Volkswagen's stock fell nearly 4% on Wednesday in the wake of news of the debacle. And that's no joke.
Whitehead doesn't think the SEC would ultimately consider a name change material to investors, though he adds that "These are all kind of gray areas, which is why a responsible company just doesn't go down this path...." But with some VW stock near a six-year high, a Bloomberg columnist calls the episode a reminder "that we now live in the meme-stock age where even bad jokes can add or subtract billions of dollars in market value." They also call it a lesson in just how difficult it is to "be Elon."

"Charming young Redditors in an authentic way isn't an easy act to pull off..." Despite being one of the planet's richest people, Musk's counterculture savvy and feisty irreverence has made him a hero for Redditors. Tesla has weaponized its soaring share price to raise billions of dollars in cheap funding. That money pays for new factories and products and is a threat to established carmakers. VW must fund its investments via the cash it generates. Even after this year's blistering run its share price is less than 10 times the value of its earnings. It would be self-defeating if VW didn't try to be a bit "cooler."

There's also a double-standard in play. We expect VW to be reliable, while Tesla gets to be quirky. Indeed, Musk gets away with things that others wouldn't. For years Tesla has marketed an autopilot system called "Full Self Driving" that can't yet drive entirely by itself — the timeline for when it will be able to do that always seems to be just around the corner....

Following VW's successful "Power Day" — a straight copy of Musk's "Battery Day" event — I quipped that it wouldn't be long before VW boss Herbert Diess was appointed "TechnoKaiser." Finance blog Zerohedge came up with the better punchline: "VW should go full Elon and file an 8K saying its new title is Voltswagen," it tweeted. VW appears to have taken that tongue-in-cheek advice rather too literally. More fool them.
Bloomberg's columnist also acknowledges that Volkswagen "has an ambitious and convincing electric-vehicle plan and may soon leapfrog Tesla to become the world's largest battery-vehicle manufacturer. But being ploddingly German is an impediment in today's stock market."
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Will VW Face Regulatory Scrutiny Over It 'Voltswagen' Prank Like Elon Musk Did For His Tweets? More

Will VW Face Regulatory Scrutiny Over It 'Voltswagen' Prank Like Elon Musk Did For His Tweets?

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  • Thoughtcrime? (Score:5, Insightful)

    by Nkwe ( 604125 ) on Saturday April 03, 2021 @01:48PM (#61233124)
    So someone at a company has an idea for an April Fool's joke and it gets discussed, but ultimately decided that the joke isn't a good idea. However someone leaks the idea and it has an impact on the stock market. Immediately after the leak the company officially says, "No, it was just an internal idea and we didn't announce it or actually do it." Sure this could be a PR tactic, and a company that does this repeatedly might be worth perusing, but it seems a slippery slope for the SEC to go after a company for this.

    • The SEC shouldn't be investigating *any* of this nonsense. If the investors don't like it, they can sue under federal regulations. The SEC doesn't need to be involved at all.

      • Re: (Score:2)

        by Entrope ( 68843 )

        That is an example of the collective action problem. The damage to any individual investor or group might be too small to justify filling a lawsuit, but if the aggregate damage is large enough, a government regulator can act to enforce the law. Of course, government agencies have their own set of incentive and knowledge problems.

        As to this specific case, I think the comparison to Elon Musk's claims does not hold up. A company renaming itself is easy to check with independent sources, in particular tradem

        • This is what class action suits are for though. I agree with your analysis that the CEO stating a private purchase at a negotiated price is different than a company renaming (why does the name change the market cap anyway?). The SEC should not be involved in these sort of shenanigans. They have a real role to play, but it is mostly focused (or should be) on investor fraud and theft.

          I think they need to be investigating Robinhood rather than this. Investors couldn't trade stocks when they wanted to through

      • If you think the investors have cause to sue, then you already know that the SEC has cause to investigate.

        Are you stupid, or just biased?

        • SEC (Score:2)

          by JBMcB ( 73720 )

          The investor lawsuit avenue is there to take pressure off of the SEC to investigate everything every company does. It also saves the government money. It also makes the most sense. If the investors are being hurt, they can claw that money back. Why would the government need to spend money to investigate a company when a class of investors can do it for free? Having the SEC do it on behalf of the investors is, essentially, investor welfare.

    • Is VW going to use the "It's a prank, bro!" defense?
      • oblig [youtube.com]

      • How about "no reasonable person would believe" this? It worked for Tucker Carlson.

      • Is VW going to use the "It's a prank, bro!" defense?

        Yep. WTF is an "Early April Fool's Day prank"? How many days before April 1st can it be applied?

        (Can I do "Late April Fool's Day Pranks" as well? That would sure come in handy...)

        • There was an episode of NewsRadio based on this premise. The station's owner, Jimmy James, didn't like to pull his pranks on April 1 because everyone would be expecting them. So he picked a random different day to do it (e.g. February 8 - don't remember what the date actually was supposed to be).

          He still shouted "April Fools!" after each one, though.

      • "Is VW going to use the "It's a prank, bro!" defense?"

        You mean like the billion dollar fraud prank?

    • You are describing a hypothetical situation entirely unlike what actually happened.

      Monday they fake "leaked" the press release by putting it in their site, then taking it off. Company spokesman Mike Giles then confirmed it was accurate. Next, the emailed the press release to reporters.

      Then the next day the company said it was fake

      A press release published on the site, which the company emailed to reporters, and which the company spokesman confirmed.

      A couple thoughts if companies do want to do an April Fool'

      • make it more and more obvious that it is a joke

        If they're going to do this stupid shit, they need to actually write a disclaimer at the bottom that clearly states it was fake. It isn't enough to just say, "well it was obvious."

    • So someone at a company has an idea for an April Fool's joke and it gets discussed, but ultimately decided that the joke isn't a good idea. However someone leaks the idea and it has an impact on the stock market.

      Do you mean "leak" as in "put it on the company web site"?

    • ...could be a...

      It seems that a lot of people have no concept of the distinction between an investigation, a prosecution and imposing a sentence/fine. The point of an investigation is so that we don't need to rely on speculation about what this "could be". We go find out what it is, and then we can decide whether to drop it (b/c it was an unintentional leak) or to prosecute it (b/c the "leak" thing is bogus and someone at VW made a bunch of money off this whole thing). Fortunately there are just barely sufficient people

  • Muskovites are getting desperate (Score:5, Informative)

    by fermion ( 181285 ) on Saturday April 03, 2021 @02:06PM (#61233174) Homepage Journal
    Volkswagen engaged in a marketing ploy of fake rebranding. This is a common, most recently IHOP. It is a silly thing, never ends well, but some people never learn.

    Musk, as chief executive, made materially false statement concerning the future of his company that investors reasonable used as guidance. Specifically he claimed that he had se used funding to take Tesla private when no such funding had been secured and no talks had occurred with investors.

    Tesla stock was pretty flat from 2017 to mid 2019. There was a spike after Muskâ(TM)s stunt, but it was an overall failure. Ultimately Musk was removed mid 2018 because he failed at his basic function, to increase shareholder value.

    • Re:Muskovites are getting desperate (Score:5, Informative)

      by quantaman ( 517394 ) on Saturday April 03, 2021 @03:50PM (#61233454)

      Volkswagen engaged in a marketing ploy of fake rebranding. This is a common, most recently IHOP. It is a silly thing, never ends well, but some people never learn.

      Musk, as chief executive, made materially false statement concerning the future of his company that investors reasonable used as guidance. Specifically he claimed that he had se used funding to take Tesla private when no such funding had been secured and no talks had occurred with investors.

      Tesla stock was pretty flat from 2017 to mid 2019. There was a spike after Muskâ(TM)s stunt, but it was an overall failure. Ultimately Musk was removed mid 2018 because he failed at his basic function, to increase shareholder value.

      More than that, Musk was deliberately trying to manipulate the market in order to screw Tesla short sellers.

      Not to mention the time someone called Elon on his BS and he responded by claiming the guy was a pedophile [wikipedia.org].

    • Ultimately Musk was removed mid 2018 because he failed at his basic function, to increase shareholder value.

      He was removed for no other reason than the SEC needed to do something or risk appearing completely toothless.

      Musk stepping down - in that particular "capacity" - was a purely symbolic compromise.

      • Re: (Score:2)

        by fermion ( 181285 )
        And yet it lead to an increase in the value of the company, a primary duty of any c level executive.

    • No (Score:4, Insightful)

      by eclectro ( 227083 ) on Saturday April 03, 2021 @04:38PM (#61233576)

      It is a silly thing, never ends well

      There was a day when the entirety of the internet pulled April Fools jokes. In fact, slashdot took part in more than one. Everybody had a good laugh and moved on and forgot about it.

      Fast forward to 2021 when the primary thing that matters for many people is their feelings and not really facts. They literally can't stand to have their feelings of self importance hurt for any reason at any time. Many people think this centers around a certain political persuasion. I dont know because I've seen it on both sides.

      What Volkswagen did was prank journalists *hard* this April Fools day. Most every journalist out there did not do their job (in my opinion) and spend 5 minutes dialing up VW and verifying the information they were about to report on. Traditional journalists used to spend a lot investigating a story and reporting *facts*.

      But instead it seems all countless journalists do these days is refresh their Twitter feed *instead of search for facts*.

      So when Volkswagen released (well however it happened) their really "fake news" "joke" so called journalists fell for it hard. Of course all the nerds out there had a chuckle and could see the "volts" for "volks" joke. But those reporting the news did not and took it as fact. Which I find more funny than the joke itself now. Of course this hurt many journalists feelings of self importance.

      The analogy for what is happening is "the emporer has no clothes" story. The journalists hit by this prank can't let it stand so of course they are going to do everything in their power to show how bad and awful this joke is by writing (and complaining on Twitter of course) how unfunny or illegal it is. But really they're just digging their own holes deeper. They'll try to use the SEC or whatever mechanism they can because again, they want to protect their feelings over protecting reality. The reality is that so called journalists really are unable to report facts. They only report what their Twitter echo box gives them.

      Professional news reporters reported unquestionable "fake news" as fact because they really are not proffessional any more, and many more people will see that now.

      Good job Volts^H^H^H^H^H Volkswagen, good job. My only question is if your Twitter account will be permanently banned because you insulted the wrong people. If it is, take it as a badge of honor.

      • It doesn't end well because it's a tired joke, not political correctness. How snowflakey do you have to be to look at a bunch of people on the internet saying "your sense of humor sucks" and to respond "my political beliefs, apparently centered around IHOP's pro-burger campaign, are the reason."

        I do disagree with GP. IHOP's rebranding was stupid. I like the Voltswagon thing, and actually I think the rebrand would be really positive for them.

      • Re: (Score:2)

        by mark-t ( 151149 )
        What VW did would have been perfectly fine as an April Fool's day joke if they had simply done it on April 1st instead of 3 days too early.

      • And we all thought it was Germans that had no sense of humour.
        Turns out it’s Americans.

        It was a joke. It flopped.
        Can we move on?

  • VW was just trying to amp up their sales...there currently is some resistance to the name change, but it should charge up their fans.

  • Invest in a calendar. You can find them in most department stores.

  • It's more of a meme-stock phase. And unless/until the trading algorithms start understanding memes, I'll put a stake in the ground that worries will pass quickly, like any individual meme. If nothing else, the algorithms could incorporate a 1-2 week time constant for meme popularity decay into their pricing, and that will probably be that.
  • Did any actual owner (shareholder) complain? If so, let's please hear the complaint. If not, this seems like a big bunch of nothing...

    • Re: (Score:2)

      by Motard ( 1553251 )

      I am a shareholder in a different German car company. I'm not concerned by this sort of thing.

  • It's a better Earth Day PR initiative rather than an April Fools PR stunt -- and if they do execute this as the name of their EV initiatives, or it actually becomes the internal name to an EV division, then it'd stave off any regulatory concerns.

    I kinda like the name, Voltswagen, actually!

  • Has that apparently purely /belief/-based "market" any shred of credibility left?

    PROTIP, you notjobs: You should be *ashamed* that it is even *imaginable* that something like this, or those tweets, could sway you at all! It sisomething that you shamefully hide under the table, in total darkness, and completely deny whenever it migt look like you might be confused for such an immeasurable moron. Lest you be looked at as the most pathetic fool in human history, pointed at, laughed at, and told you deserve it,

    • Yup. Anyone with a working brain would have just smiled and said, hey , nice joke, then forgot all about it. But apparently not rocket scientist "investors". Just how congenitally stupid would you have to be to actually believe it was true?? I despair of the current crop of morons in the markets. Back in the day when I worked in finance there were plenty of Gordon Gecko types, but at least they knew wtf they were doing and were nobodies fool.

  • I've only had a brokerage account for about a year, but a name change isn't going to effect me one way or another - especially since I was aware of the timing and it was a 'leaked' press release.

    If anyone changes a stock position based on a leaked press release for something like changing a corporate name around April Fools day they deserve everything they get. If a 'Professor of Business Law' didn't do their due diligence and fell for it they should be losing their title.

    • You're a moron if you're a stock trader and you think your own little opinion of what you would trade on is more important than the actual movements in the stock, that happened.

  • Comment removed based on user account deletion

  • In the UK April fool adverts have been a thing for decades. People looks forward to them, we expect all the big name companies do one. The Litigation culture you have in the US stifles creativity. The BBC even gets into this game.

    BBC News: Spaghetti harvest [youtube.com]

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