> Edit: Also, if Elon is reading this, I'll happily buy 14.9% of twitter, and vote as part of your block. Just pay me enough to cover the sale and taxes, plus 1%.

You might want to speak with a lawyer who is familiar with inchoate crime.

What you publicly proposed to Elon is a crime, since you intend to conceal beneficial ownership of shares.

> since you intend to conceal beneficial ownership of shares

Promising voting rights doesn't change beneficial ownership. Twitter would have precedent, however, to find "conscious parallelism" and thus "a de facto control bloc" between the commenter and Musk, and thus bundle them for purposes of the poison pill's activation [1].

Still, not a crime. Civil dispute under corporate law.

[1] https://www.yalelawjournal.org/comment/unpacking-wolf-packs

As of January 2021 there is a whole bunch of new reporting requirements for beneficial ownership to combat money laundering and hiding assets. Structuring a stock trade to conceal the actual owner of securities (note the parent poster didn't offer to vote HIS shares) and failing to file disclosures is absolutely criminal.

The Yale Law article you cite is just about groups of investors working together, which is within their rights.

"Publicly proposed" contradicts "conceal beneficial ownership."

It's not a crime to publicly finance someone else's stock purchases, or even to publicly solicit others to finance your stock purchases (it's not "solicitation" in the inchoate sense, since the inducement is not towards a crime).

Likely wouldn't even get around modern poison pills since they often contain "wolf pack provisions" covering multiple persons acting in unison.

> What you publicly proposed to Elon is a crime, since you intend to conceal beneficial ownership of shares.

Not really.

Setting aside the other issues, first and foremost this is obviously a joke. Prosecution would have to establish mens rea for this to rise to a criminal act. Do you think anyone could prove true intent for these events to unfold, based on this comment?

Yet another example of something that many people wouldn’t think would be a crime, but would send them to prison for decades!

Fuck with rich peoples money, you're going to jail _for a long time_. Murder someone in a case of 'mistaken identity/residence', go to work tomorrow.

Where does the concealment come in?

If you are claiming you own the shares when in fact Elon payed for them, you are concealing that Elon is the beneficial owner.

If you admit that he is the beneficial owner and you are just an intermediary, then the poison pill provision is not skirted.

Yeah, there's no concealment and no beneficial ownership. "I'll vote as part of your bloc" isn't beneficial ownership. (At most it's delegating the 'control' aspect of the equity, but even that is a stretch - in context, it's clearly a statement of incidental agreement with his opinion on this point, not a total delegation of control no matter what he should choose to do in future.)

No, "I'll vote as part of your bloc just pay me $50M" is obviously not an incidental agreement.

Agreed, but there'd be no attempt at concealment (I didn't know beneficial ownership of shares was a thing), so, while it would be dumb to hand me and the IRS a large pile of cash, it sounds like it would probably still trigger the poison pill, and not be illegal.

If doing it above board wouldn't make sense anyway, that means the idea is to do something illegal. You'd know who controls the board, how many shares the person currently buying it has secured, which way votes are going to go before they happen, etc. The rest of the shareholders, the rest of the whole market, wouldn't. You'd claim (and would probably have to in sworn testimony) that billion dollar gifts to you from Elon Musk, including your stock itself, were incidental.

Even more importantly: pay me to cover the sale is the easiest 'piercing of the veil' in the history of time.

Oh so Mr. Musk incidentally wired you billions of dollars before the share purchase?

So shareholders aren’t allowed to coordinate?

I'm glad I'm not theonly one who caught that, because if so, this appears to fundamentally undermine freedom of assembly /speech.

(Assembly into blocs of financing, dpeech as the action of capital allocation)

Honestly I'd lose faith in the U.S. in it's entirety if it was the case that the answer to your question was even remotely "yes".

It’s pretty fundamental to investment / mutual funds. Vanguard, Blackrock, etc. None of them are the beneficial owners of Tesla, but all of them are coordinating the activities of millions of investors they represent.

That's what I mean. If it were the case that coordination can't be done, it violates every normative expectation.

Keep in mind, I lump in people's behavior with normative restrictions of the First Amendment. If the Government can't do it, and the Government is us, we shouldn't be doing it. So businesses doing it because business doesn't hold for me either. Especially if it happens as a method of indirection to work around literal interpretation.

So if there is a restriction on shareholder coordination, I don't see how our legal system in this case can be taken seriously as anything but a tool utilized by those in positions of influence capable of more tightly coupling to other people of influence.

I agree with your conclusion but not really your reasoning. There are countless things the government can’t do, which individual people can do. I can respect an establishment of religion. I can spend money without a transparent and disinterested tender process. Etc etc. You seem to be taking a very literalistic, almost theological reading of “the government is the people” - yes, the people choose and appoint a government to represent them, but hopefully you understand that the government isn’t metaphysically the same thing as the people.

Saying “the government is the people” is much like saying “the shareholders are the managers of the company”: yes, that’s true in an oblique, ideal sense, but you’re going to run into trouble if you start trying to literally substitute the one for the other in random sentences.

They all register and file disclosures though. A private fund of this size concealing its existence, its structure, and its objectives, is immoral and bad for the stock.

And inchoate crimes don't require the person to do as you commanded them. Just the statement above would probably be enough to charge someone. And even if the crime you are encouraging someone to commit is impossible (for instance, asking Musk to buy 110% of Twitter through you), it is *still* a crime for you to have asked him.

I’m not sure how the second part of your claim holds up if you treat your first contention (with which I agree) as a precondition. In particular, I think it wouldn’t be possible to prove mens rea, which you’d have to do if no crime ended up being perpetrated and you’re charging someone only for the alleged solicitation of an inchoate crime?

IANAL, I just play one on TV, so I might have fucked it up. Wikipedia seems to have some good and amusing examples on their page:

https://en.wikipedia.org/wiki/Inchoate_offense

I imagine if an ETF accidentally exceeded 15% then the board would go talk to the fund managers and maybe get them to sign some documents. This isn't a computer program that will automatically trigger armageddon. It is just some new rules that mean if you turn up at a board meeting saying 'haha, I just bought your company and you are all fired', the board gets to say 'nope, we just issued a bazillion shares and gave them to all the existing holders except you, and you now own just 14.9%, sorry not sorry for your loss'.

This happened with SKT (Tanger outlets) which is a high dividend paying stock in SDY ETF. The ETF was approaching 50% ownership stake.

The fund needs to report their holdings. Not all companies have a poison pill provision. Not all companies that do have a poison pill will activate it. In the case of an ETF there's usually a discussion between the portfolio manager and the company. They know where they stand. Plus it's not really in a passive fund mandate to go activist.

Poison pills often have exemptions for passive investors such as ETFs.

Don't think that's true. ETF fund managers, when faced with a corporate action decision, will always vote for whatever maximizes their shareholders value.

Courts have upheld poison pills that treat 13D and 13G filers differently. I'd wager most ETFs that hold 5% of major public companies are 13G filers. Vanguard files a 13G for twitter. To be fair idk what the twitter pill will do - maybe it will be more aggressive.

X AE X-12 buys 15% triggering pill, X sells shares immediately to drop price, elon purchases 42.0% equity by minting new discounted budget shares?

An ETF isn’t going to “accidentally” exceed 15% ownership of Twitter.

Seriously, do you think funds playing with the kind of money to buy 15% of twitter often make careless purchases?

>Edit: Also, if Elon is reading this, I'll happily buy 14.9% of twitter, and vote as part of your block. Just pay me enough to cover the sale and taxes, plus 1%.

Such an arrangement would make Elon the beneficial owner of your shares.

Barclay's literally forgot to register with the SEC to be allowed to issue securities, then issued $15bn of them over the course of years, and lost $600m as a result. If you think "funds with this kind of money" are any better than a pack of chimps, then you should direct that "seriously" back at yourself.

https://www.bloomberg.com/opinion/articles/2022-03-28/barcla...

Just because one tiny fund screwed up once does not mean that it is anywhere near likely that any ETF would screw up in a manner that would trigger this poison pill.

$15bn is tiny, presumably we’re talking about big ETFs like SPY here.

And anyway, you’re pretty much agreeing with me. It’s absolutely possible for a big fund to make a huge and hilariously stupid mistake, but this twitter poison pill does not meaningfully affect the chances of that happening.

In a world where you can shoot yourself in the foot in a million ways, it is utterly pointless to speculate about this one extraordinarily unlikely situation.

What? Barclays is one of the largest financial institutions in the world with $1.9tn in assets.

I think we're in agreement that this Twitter thing isn't worth the attention, but we are far from agreeing that large financial institutions are inherently competent because they're large.

I was literally wondering what would happen. ETFs are supposed to be algorithmically traded right?

There's a race condition between the poison pill being instated and the ETF updating their strategy. I wonder if a board could maliciously take advantage of that somehow.

ETFs generally aren’t managed without human involvement, and this poison pill isn’t software either. You’re taking concepts that exist in worlds like Ethereum and applying it to normal finance. That’s not how it works.

> but we are far from agreeing that large financial institutions are inherently competent because they're large.

I don’t see anyone making that argument.

Speculating on an ETF “accidentally” acquiring more than 15% of Twitter implies a whole different level of incompetence than a big ETF ever fucking up big.

> Seriously, do you think funds playing with the kind of money to buy 15% of twitter often make careless purchases?

- You

Could you please stop breaking the site guidelines, regardless of how bad another comment is or you feel it is? You've been doing it a lot, unfortunately, and we've already warned you several times. If it keeps up we're going to end up having to ban you.

https://news.ycombinator.com/newsguidelines.html

What’s the problem with my comment? The word “fuck”? The fact that the other commenter got offended because I pointed out their very real struggles with reading comprehension?

I did not call kolbes comments bad, but patiently explained where they got it wrong.

I think you’re seeing fighting where there’s none, at least not on my side.

For starters, "Yeah, I’m sorry that you can’t understand English" was obviously an egregious violation of the site guidelines.

We don't care about people saying "fuck". We care about the things that are in the guidelines, such as being kind, not being snarky, not calling names, and so on.

https://news.ycombinator.com/newsguidelines.html

There are billions of people on this planet who can’t understand English, there’s nothing wrong with them.

It’s really not unkind to point out when someone is aggressively misinterpreting really simple words.

What you wrote would be taken by most readers as an obvious personal attack. If you say you didn't intend it that way, ok, but we still have to ban accounts that post like that, because such comments are indistinguishable from garden-variety personal attacks.

Good luck with that perspective in life. I'll stick with writing clearly. You stick with writing poorly and flipping out whenever people misunderstand your intentions.

You broke the site guidelines badly in this thread. Please don't do that, regardless of how bad another comment is or you feel it is. We ban accounts that do that because it's so destructive of what this site is supposed to be for.

https://news.ycombinator.com/newsguidelines.html

> Such an arrangement would make Elon the beneficial owner of your shares.

Thanks for explaining why that won't work.

Presumably, if Elon has a few rich friends, they could use their own money, vote as a block, and the board would still be screwed.

I wonder what other schemes would work. B corp, maybe?

> Presumably, if Elon has a few rich friends, they could use their own money, vote as a block, and the board would still be screwed.

But that’s just playing along with the spirit of the rules, not a loophole.

> An ETF isn’t going to “accidentally” exceed 15% ownership of Twitter.

No, but an ETF has a defined investment strategy, and if enough money comes into the ETF, it could potentially trigger this.

Do you think big ETFs just buy shares willy nilly without any due diligence on company charters and bylaws?

Index funds do, that's pretty much the definition of an index fund.

ETFs are a different concept, but a good index fund will be structured as an ETF, and it looks like this thread is using "ETF" to mean "index fund"? If so, then the answer to your question is an unambiguous yes.

This is simply incorrect. Index funds still do basic due diligence, they would not trigger this poison pill.

I’m curious what happens in that case, then - let’s say hypothetically that SPY has enough cash come into the fund that they’ll cross that threshold if they follow their stated investment policy (“buy the S&P”) - what’s the move, then?

Buy futures or other assets that will mimic the price.

The stated investment goal isn't "buy the S&P", it's "match the price of the S&P".

How far can you go with that strategy? The derivative assets aren’t going to fully move with the price, and can have much higher volatility than the asset you’re trying to avoid buying.

No, you aren’t going to have higher volatility like this than you would buy triggering a poison pill like discussed in the article.

They will talk to Twitter board and make an agreement with them to not trigger the poison pill, and continue buying shares.

Such an agreement would be reached incredibly quickly, there would be no need for stopgap measures.

From the article:

> Under the new structure, if any person or group acquires beneficial ownership of at least 15% of Twitter’s outstanding common stock without the board’s approval

If it’s a passively managed index fund, then yes, absolutely.

That is not what passive management means.

For example in the case of SPY, that would go against their stated investment objective.

They also clearly state

> the Trust may fail to own certain Index Securities at any particular time, the Trust generally will be substantially invested in Index Securities

Alright, then I suppose they’d buy up to 14.9% and then create additional long exposure thru swaps or synthetic longs using options.

Or they’d just hit up twitter’s board, enter an agreement with them, and continue buying shares as normal.

The poison pill just requires prior approval from the board, which they would happily grant in this kind of a case.

... wouldn't that imply the ETF was 15% of the market or market segment overall?

Yes, which is excessive, I agree, but there’s nothing mechanically preventing it.

So you do agree with me that this is not going to happen.