Elon Musk Reacts To An Old Clip From Lex Fridman's Podcast On What 'Exactly' Is Wrong With SEC: 'The Lawyers Of The SEC Are Not Paid Well'

Elon Musk, the CEO of Tesla Inc. TSLA, recently expressed his dissatisfaction with the Securities and Exchange Commission (SEC) on Lex Fridman‘s podcast.

What Happened: On Tuesday, Musk took to X to agree with a post by @MuskBreaking that highlighted a snippet of his criticism of the SEC during a podcast interview with Fridman from November.

In the conversation, Musk shed light on the SEC’s failure to protect retail investors from hedge funds that engage in short selling and market manipulation. According to Musk, the SEC has consistently turned a blind eye to the illegal activities of these hedge funds, despite their harmful impact on individual investors.

“Not once did the SEC go after any of the hedge funds who were nonstop shorting and distorting Tesla. Not once. The hedge funds would lie flat out on TV for their own gain at the expense of retail investors,” Musk said.

Musk believes that ‘the lawyers of the SEC are not paid well’ and seek to find lucrative job opportunities at top law firms. However, this creates a conflict of interest, as these law firms often employ hedge funds as clients.

“They know if they attack the hedge funds, they are affecting their future career prospects. So, they sell small investors down the river for their own careers. That’s what happens. Regulatory capture,” Musk added.

See Also: Musk’s China Mission Pays Off? Tesla Reportedly Inks FSD Deal With Internet Giant Baidu

Why It Matters: This comes a day after the U.S. Supreme Court rejected Musk’s appeal against a securities fraud settlement with the SEC. The court upheld the 2018 settlement that resulted from Musk’s claim of having “funding secured” to privatize Tesla, a statement the SEC found to be false, leading to accusations of defrauding investors. The settlement involved a $20 million fine.

As part of the settlement, Musk is not allowed to post certain items related to Tesla on social media and needs prior approval from an internal attorney before posting.

This development also comes at a time when Tesla’s stock has been experiencing significant fluctuations. A prominent investor shorted the stock in March, citing concerns about Tesla’s ability to meet delivery targets and the potential impact of Federal Reserve actions.

However, the narrative shifted in April when Tesla’s shares rallied over 15% following news of a deal with the Chinese government to roll out full self-driving in the country. This move was praised by CNBC’s Jim Cramer as a game-changer for Tesla, potentially opening up a new revenue stream and restoring price momentum.

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