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One of the core functions of the U.S. Securities and Exchange Commission is investor protection. The SEC protects investors in many ways, but among the most interesting are its efforts to protect investors from their greatest threat: themselves.

From time to time, the SEC’s Office of Investor Education and Advocacy releases Investor Alerts, which warn people about prevalent investment frauds and scams to hopefully prevent readers from becoming victims. The Office of Investor Education and Advocacy also periodically publishes Investor Bulletins, which are not so much focused on a particular fraud or scam as they are on general topical issues that should be of use broadly to investors making investment decisions.

And sometimes the Office of Investor Education and Advocacy takes a less formal approach and simply tweets (for better or worse, at this point in history tweets are probably a far more effective way to actually reach people than a carefully worded alert or bulletin). For example, on May 19, the SEC Investor Ed handle tweeted, “It’s never a good idea to invest in something just because someone famous says it’s a good investment.”

The SEC did not mention any particular famous person or potential investment on Twitter. Yet, a lot of people replying to the tweet (to the extent they weren’t posting memes or sexually explicit jokes) seemed to think the SEC was getting at Elon Musk’s apparent support of the meme cryptocurrency Dogecoin.

Elon Musk has said some positive things about Dogecoin. He did also humorously refer to it as a “hustle” on national television while he was hosting SNL (which sent its price plummeting). I’m not sure he ever called Dogecoin or any other cryptocurrency a good investment though. Elon Musk definitely did say, “Cryptocurrency is promising, but please invest with caution!” He made similar comments to TMZ in February, when he said “People should not invest their life savings in cryptocurrency, to be clear. That’s unwise … it’s all speculation at this point.” Musk also more or less said that if people wanted to speculate on cryptocurrency and have some fun, go for it, as long as they acknowledged the reality of his cautionary comments.

So, the problem with Elon Musk’s comments on cryptocurrency seems to be more with whatever people project onto them than with the actual comments. And as much shade as he gets for some of his antics, you could definitely find famous people who are far less well-informed about what to do with capital than the CEO of Tesla and SpaceX and occasional richest person in the world. But if you’re desperate to believe that Dogecoin is your ticket to success, sure, you could convince yourself that you heard Elon Musk say Dogecoin is a good investment. 

There are plenty of celebrities with far less nuance to their comments and actions than Elon Musk. As with sneakers, cars, or anything else, the fact that a celebrity is paid or otherwise induced to endorse it does not make an investment any better than it is on its merits. Paris Hilton famously endorsed (in a since deleted tweet) crypto startup LydianCoin, whose founder was later jailed. Even beyond direct endorsements, mere celebrity involvement in an investment, though meaningless, can apparently be given some special significance by many investors. In March, the SEC warned of celebrity involvement as sponsors or investors in special purpose acquisition companies, which are vehicles for private companies to go public without navigating the regulatory minefield of a traditional initial public offering. Basketball icon Shaq, for instance, is one of those celebrities involved in a special purpose acquisition company who probably helped spur the SEC’s recent warning.

Generally, Elon Musk knows what he’s talking about, although it’s important to listen to the words he is actually saying — don’t project your fantasies as an investor onto an Elon Musk backdrop. When it comes to anyone who is famous for having been on TV though, maybe go elsewhere for your advice, investment or otherwise. Unfortunately, in a county where a lot of people rely on celebrity politicians over doctors for things like vaccine advice, cautionary investment warnings from the SEC are probably going to fall on a lot of deaf ears. If only the SEC had been able to get Dwayne “The Rock” Johnson to promote its warnings about investment advice from celebrities, then maybe we wouldn’t be in this mess.

Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.

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