Elon Musk OUT as Chairman Of The Board of Tesla as part of $40 million settlement with SEC
Washington, D.C. – Tesla CEO Elon Musk has reached a settlement with the U.S. Securities and Exchange Commission. Musk agreed to pay a fine of 20 million dollars as part of the settlement. Additionally, Musk agreed to step down from his role as chairman of the Tesla board within 45 days from today. He has agreed to not again seek reelection or accept appointment as chairman for a period of at least 3 years. Musk will remain CEO of the electric automaker. Tesla has also agreed to pay a separate fine of 20 million dollars as part of the settlement.
The SEC filed a complaint Thursday in federal district court alleging Musk lied when he tweeted on August 7th he had secured funding for a private takeover of the company at $420 per share. Federal securities regulators then reportedly served Tesla with a subpoena just a week after the tweet.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
The SEC said in the complaint that Musk violated anti-fraud provisions of the federal securities laws. The commission also asked the court to fine Musk and bar him from serving as an officer or director of a public company.
It can take years for cases like these to work their way through the U.S. court system. In the process it can cost taxpayers millions and millions of dollars for the federal government to successfully prosecute these types of cases. So, from the perspective of the American taxpayer, this settlement may have been a wise decision.
The news might not be so good for Tesla shareholders. Some experts have predicted Tesla’s stock could fall as much as 20% or more in the aftermath of these events.
Photo courtesy of Elon Musk.