Having a court ordered judgement entered against you is cause and is a result of due process. It's an entirely different scenario.
We see this all the time already. For example, Medicaid won't pay for your extremely expensive end of life care if you have assets. So, people give away their assets (to a trust, to family) before applying for Medicaid to cover their nursing home. It becomes a game of cat and mouse. People will adjust where they can to avoid tax.
This also already happens with income tax. For example, executive compensation is primarily provided as capital gains rather than income because it's much more tax efficient. Everything is in the open.
The other issue here is one of cost. The IRS has to fund the cost of analyzing filings and deciding to audit. This is very different from a post-judgement scenario.
It's a very different thing.
1. A surprising departure from the rules and norms - I assume probably illegal.
2. Part of a campaign designed to ruin Russia.
You might have misunderstood the argument the anti-taxers (pro-property?) people are bringing up. There isn't a physical problem with taking wealth away from people, that part is very easy to execute. The problem is the 2nd order effects where it will turn into an unfair confiscation and do substantial damage to the ability of the host country to invest and prosper, bringing general ruin to us all. The fact that wealth confiscation is being deployed against Russians is no surprise from that perspective and not undermining the core argument.
However, if it makes you feel better, I do agree that given that the War on Terror was pointed inwards fairly quickly I expect the techniques used in the War on Russia's Economy will also move to US home soil in the next decade and there may well be large scale wealth confiscation in the US.
But this does not apply to us when we seize Russian assets? By your very logic if seizing wealth is so problematic, well we just seized a whole lot of wealth. I don't think this example actually works here.
It would be bad if we did this to ourselves. We do it to our enemies to hurt them.
But, I suspect the other guy was referring to trusting in economic stability. I don't think there's any reason why sanctions against bad actors like Russia might undermine trust in American investments.
If you want to make the argument that it is literal and raw might-makes-right on the high seas, ok. But that type of barbarian world is not one I encourage and it'd be a bit stunning to find someone who wants the world to work that way.
The US wouldn't do well in a world like that either, US citizens have more assets to seize than foreigners do.
As if that's not evidence of far more barbaric mechanisms at play in geopolitics...
There is a pretty good chance this is just making people feel bad and making it harder to normalise the situation. This is action is literally not helping, and is a breach of good norms against stealing. It means the Russian billionaires will be forced to spend more of their money in Russia and have a great reason to bear a grudge against the more Western powers.
Any Russian billionaires that don't realize that this is more of Putin's incompetence than western antagonism deserve a random punitive gesture.
In reality the majority of them will see this as a great reason to bear a grudge against Putin.
Maybe I've missed out on some life experiences, but I've never seen petty theft help defuse a tense situation. It is not going to be beneficial to achieving a sane outcome.
> In reality the majority of them will see this as a great reason to bear a grudge against Putin.
This is wishful thinking. All of the thievery was done by NATO - there is a very high chance that they will identify NATO as the threat to them.
And if they do blame Putin (which I think is unlikely, groups tend to close ranks when threatened) how is that supposed to help? What are the billionaires supposed to do that the Ukraine military or US State Department can't do? Billionaires aren't that big compared to a government military.
And you're vehemently argue against points that have been known for months, the oligarchs are deeply unhappy with Putin over what has happened: https://www.washingtonpost.com/world/2022/04/29/russia-oliga...
Putin may have them under his thumb, but that doesn't mean they should be left to their comfort rather than forced to face the direct consequences of Putin's actions.
2. What do you expect to happen here? How do you think these thefts have helped the situation? Even if you want to argue that these people now hate Putin, they are powerless. The west just stripped them of all their assets.
Wealth is actual ownership interest in valuable companies, which can be moved offshore or the person can renounce citizenship and relocate to a country with friendlier tax laws in the extreme case.
A wealth tax would also have the effect that people expecting to generate lots of wealth would just move somewhere else to do so, or not come to the US in the first place.
Whenever I've seen it brought up it's always that it would require a constitutional amendment (specifically in the US). The federal government isn't allowed to do taxes that way under the current system (Article 1 Clause 2 Section 3).
Hell, the feds weren't even allowed to do a straight income tax until the 16th amendment.
Yes, I mostly see people saying that laws don't matter because billionaires are beyond law at this point. Who knows, perhaps that's astroturfing by troll teams employed by billionaires to try and discourage the masses. As you said, they've already got plenty of lawyers to work on it from the constitutional end - including 6 of the lawyers on the Supreme Court.
Huh. Weird. Well, I don't see it brought up on HN all that often (once a month tops?), so we must hang out in different circles outside of here.
Anyways, you have a good one.
Musk is a special case because he has done things like threatening to ruin the careers of SEC lawyers who have come after him, and he has the power to make that happen.
Is this illegal? Probably. Does Musk get away with it? Yes.
There's no shortage of law firms willing to go up against billionaires. Hell, there's no shortage of firms willing to go up against criminal enterprises like drug cartels.
The idea that Musk is somehow more threatening than the types that the US court system regularly puts under their thumb is simply laughable.
This Musk will ruin careers stuff is way, way overblown. If they lose his business, he wasn't worth working with in the first place.
What Musk did was petty and questionable, but it didn't fundamentally change anything for Cooley.
It's not a big deal.
Does he? How can he do so?
He can talk big, he can bluster, but can he actually ruin a government lawyer's career? I kind of doubt it.
"“What are they going to do if there is a judgment and he says, ‘Well, I’m still not going to buy it’?” said Zohar Goshen, professor of transactional law at Columbia Law School. “They don’t really have tools to force him to go through with it. You don’t put people in jail because they don’t buy something.”"
https://www.wsj.com/articles/twitter-elon-musk-set-for-unpre...
Courts are entirely capable of seizing such assets.
1) The court would issue a judgement for Twitter, against Musk, for $44b.
2) Musk would either voluntarily pay it by selling his own assets, or he would refuse. If he refuses, then:
3) Twitter would go about seizing and selling Musk's assets, until they have raised funds to cover the $44b judgement.
Twitter could levy whatever brokerage or account Musk uses to hold his shares. Somewhere there is an account which records the shares. Twitter would serve the entity managing the account with a levy, and order the shares be liquidated.
(1) Would it be legal for him to own the brokerage?
(2) What if he moves all of his stock in offshore accounts?
Shares don't need to be held in a brokerage. There's always a process to identify and seize the property in question.
2) There's no such thing. TSLA is a US public company, traded on US exchanges. It's simply not possible for shares of the company to exist outside of US jurisdiction.
Tesla being a Delaware corporation, it would be within the power of the chancery court to order that very thing.
(1) Would it be legal for someone to own the legal entity owning their shares of publicly traded companies?
(2) What if he moves all of his stock in offshore accounts?
The legal entity which maintains the list of teslas owners is ultimately tesla, but that duty will be likely given to dtcc.
A stock is ultimately just an entry on a list maintained by the company, most offload the managing of the list to DTCC and usually the pointer isn’t to you but to your broker dealer.
There is no sense of being able to hide ownership overseas, we’re talking about an American company keeping a list that points to someone, that list can’t be offshored.
https://en.m.wikipedia.org/wiki/Depository_Trust_&_Clearing_...
For one commonly used transfer agent's take, see: https://www.computershare.com/us/becoming-a-registered-share...
For them, $44b is the crumb left behind after you've eaten the small potatoes.
He may just own the shares directly with the company (we’ve largely done away with paper share certificates). Or he may have transferred them to his broker (Morgan Stanley?) (who in turn might custody them with a custodian BNY Mellon?) who holds them on his behalf. If he then transferred those shares to say DBS in Singapore MS/BNY is going to inform computershare “fyi we just sent all those Elon musk shares to DBS in Singapore” and DBS is going to say (FYI we know have custody of all those Elon musk shares)..,and when you go looking for those shares all you have to do is go to computershare with a court order and say where are Elon’s shares, and they’ll be like, oh over at DBS in Singapore… and for all I know the registrar can probably just send a note to DBS in Singapore and be like (ahh we got a court order to transfer these shares to some other guys so we did, subtract $44b from his account)
All of this is a long winded way of saying that “shares” are just entries on a ledger maintained by the company or someone else on their behalf, which makes seizing them, typically pretty easy…
No they won't. This is Twitter, not Oracle.
BUT, if Elon fights back hard, Twitter will have to stop.
Civil court works on fiscal, property to mitigate damage. If he is found to breach contract, a court could order seizure of assets (cash or property).
There could be punitive damages assessed too, if his actions are seen as purposefully malign.
You can have criminal contempt in a civil case and criminal contempt in a civil case. The rules vary by state but in PA it’s civil contempt is used to force people to comply where criminal is punishment for disobedience.
What I mean is, the remedy for non-compliance with contracts, is fiscal, seizure, penalties of thus nature.
The goal of civil court is not the state punishing, but instead, laying out compensation, for damages, to the harmed.
There is no contempt of court for not paying these damages.
Then how does the civil court function? If nobody follows the courts order, the court is redundantly illegitimate.
No one is going to assault a cop, or have their bank shut down due to non compliance.
Where I am, what often happens is the damaged party has papers showing debt owed. It then becomes a colllection issue, sometimes, in some jurisdictions court takes an active role, in others, you have to do the work yourself.
Eg, you have to find their bank, hire a sheriff(the seizure kind), and go get what is now "your stuff".
That will certainly stop anyone from pulling this bullshit again!
Case studies are what has happened e.g. with Microsoft, other large businesses - long legal battles are fought, nothing happens while things are in limbo.
When the rubber finally hits the road, things happen fairly quickly, but until then it does look a bit like "nothing happens".
This is of course, a problem, perhaps one that needs innovating around.
There are remedies for people like you and me and most people who disobey court orders.
You can observe time and again that for those who are well connected and have some billions, the concept of law is far more malleable.
And by history, he may very well be right.
No. He’s suggesting that Musk’s wealth and power will make the people who work in US courts reluctant to impose financial penalties, find liability, and seize assets.
Still a strong #2, but he sure is trying his hardest for that top spot.
A court can compel "specific performance" if the contract's terms require it.
There isn't even one single court imposed fine which he hasn't paid.
That's what I thought. Musk just ignores the law and gets away with things on a regular basis.
If you would like to go see ways in which the government fails to penalize powerful entities, look no further than the financial crisis fines. What you were told were 10 figure fines ended up becoming a few million dollars in consumer relief headaches
If your interpretation of the post suggests that a highly qualified attorney is getting the basics of US law absurdly incorrect, you might want to reconsider whether you're understanding the intended meaning.
(Here, Levine is making a specific claim about the remedies that the Delaware chancellory court typically employs, not about the authority of US courts)
I'm open to that criticism; I'm typically pretty skeptical of appeals to authority myself.
But to be clear: the appeal to authority I'm making isn't "legal opinion of a lawyer" (I agree that's very weak) but rather "opinion on corporate law by a Wachtell attorney who practiced corporate law" (Wachtell is probably the best corporate law firm in the world, and clearly in the top handful)
How do you seize billions of dollars of stock without affecting share prices?
They could contact the broker holding his shares and restrain them, order them sold, and collect the proceeds.
They could seize and sell at auction the real property of any of his businesses. SpaceX rockets? Office chairs? Servers? Anything.
All of this enforcement costs money. Twitter would account for the money spent seizing assets and charge those expenses to Musk as well.
Assets seized in this way (including stock) are often sold for much less than they're ideally worth. It's Musk's problem. Twitter would be empowered to seize seize seize until they've raised enough cash to cover the judgement plus expenses.
They could not, because he does not own those businesses outright. Doing so would violate the other owners rights. They can seize his shares in SpaceX, but not SpaceX property.
But the end result is always the same. You can either voluntarily liquidate and pay your judgements or you can have someone else do it for you.
I have not done an analysis on exactly which of Musk's private companies are jointly owned, and how the ownership is structured. It's a comment on hn for crying out loud.
The only question is regarding which entity is liable. If a judgement were entered against SpaceX, for example, then absolutely rockets and real property owned by SpaceX can be directly seized.
Without looking, I'm certain there are at least a few companies owned by Musk which could have their assets taken directly.
Why should the court or Twitter care if they end up converting 10x more of Elon's stock to cash?
I guess some day traders would get rich (and people that had to sell for the day or so when the stock tanked would take a bath), but that's the biggest problem I can come up with.
You’re acting like the asset value at all matters to the courts.
Elon and Twitter have a contract. Elon wants out; Twitter doesn't want to let him out; the contract only has limited conditions to allow Elon out. The court is simply deciding which of two options is the case:
1. Elon's reasons are valid; he gets out of the contract for a $1B payment.
2. Elon's reasons are not valid; he has to satisfy the contract and pay $54.20/share for Twitter.
If the judge decides in favor of #2, it is Elon's responsibility to come up with the money. (If he doesn't do so willingly, someone court-appointed will step in and do it for him.) If that tanks Tesla, that has nothing to do with the court.
Now, Tesla shareholders can sue Elon for getting the company into this pile of stank....
Trying to argue, in court, that you are entitled to have your investment insulated from loss due the primary owner selling it?
We were talking about the courts seizing the assets though, it's not being voluntarily sold.
Why should that be a concern?
The drop in share prices as you do this is not your concern.
Imagine I go to mcodnalds and offer $10 for a big-mac unconditionally, lol. I'm going to get a half eaten shit sandwich and a broad grin.
But hey, we've got beanbags and a playstation.
What he doesn't have is the inclination.
Anyway, I'm no expert on Musk, and I have almost zero interest in Tesla, or Twitter, or any of this clown show. So maybe my ballpark guesstimations of all the relevant numbers are way off. So take it all with a huge pinch of salt. I am just some uninformed spectator watching two lizards fight in the dust and speculating who will win or whatever :)
Edit: leveraged -> unleveraged, woops
This is pure speculation on my part, but I don’t think it’s insane.
A Delaware court doesn’t have as much reach as you might think if most of Musk’s assets are not there.
Not to mention, how many corporations which Musk has shares in, are Delaware companies?
All of this, how to assess and collect damages, goes back to Roman law.
That’s not how the court works, except in extreme circumstances which don’t apply to this twitter acquisition attempt.
Also, Musk asserts that upto 50% of twitter users are bots, which is totally believable. So the chances Musk will have to pay anything is actually remote, since twitter would have to produce evidence that would reveal trade secrets.
Here’s my prediction: Musk will pay nothing because Twitter has allowed itself to be infiltrated with bots and revealing this will be far more damaging than losing out on a billion. Musk will walk away.
That is precisely what the merger agreement is: a contract forcing Musk to buy Twitter.
I can't believe people are taking this very silly statement seriously. This is utter nonsense. There are remedies for people who disobey court orders. Having assets makes you more vulnerable to a court's authority because you have something to lose.
If a court orders specific performance and he doesn't do it then he's liable and the court will take his assets to compensate.
Is Levine seriously suggesting that US courts don't have the authority to impose financial penalties, find liability, and seize assets? This is such an absurd thing to say it's hard to find a way to charitably respond.