Criminal? Goldman Upgrades Tesla To Buy Same Day It Underwrites Offering
Tesla Motors Inc (NASDAQ: TSLA) announced a $2 billion offering after Wednesday's closing bell. The net proceeds from the offering are to be used to accelerate the ramp of its Model 3. CEO Elon Musk will sell the remaining shares to "cover tax obligations associated with his concurrent exercise of more than 5.5 million stock options."
What's interesting here is one of the underwriters on the offering: Goldman Sachs Group Inc (NYSE: GS). Just a few hours earlier, Goldman Sachs upgraded the stock to Buy and set a $250 price target. This caught the attention of many traders and investors, most notably the crew over at Zero Hedge.
"Back in February 2014, just hours after Morgan Stanley shocked the market with an upgrade of Tesla which had a price target over 100% higher than the existing price," Zero Hedge wrote. "We reported that Morgan Stanley stunned the market when it also announced it was the underwriter on a $1.6 billion convertible bond offering for Tesla."
The cynical blog now sees perhaps another crime.
"What however one can easily make a strong case was a crime, if only in direct breach of an internal Chinese wall, is that moments ago the very same Goldman Sachs (and Morgan Stanley) announced they are lead underwriters on a $2 billion stock offering for Tesla, one in which none other than Elon Musk was also selling over half a billion dollars in TSLA stock."
The Zero Hedge post continued, "While Tesla's imminent capital raise should come as no surprise to anyone - we had predicted it would happen just a few weeks ago when the company announced its deplorable earnings - that it has happened in such a blatant fashion by Wall Street's "best and brightest" bank is absolutely mindboggling; worse that banks have confidence they can get away with such egregious criminality is the only confirmation one needs to know just how broken the US legal system truly is."
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