Elon Musk Steps Down as Chairman, Settles With SEC
Consequences have come swiftly for Elon Musk.
Less than two months after he tweeted that he had secured enough funding to take Tesla back private, and just a few days after being charged with securities fraud, Musk has settled with the Securities and Exchange Commission after the SEC charged him with “false and misleading” statements and a failure to properly notify the regulators of material company events.
The settlement is still subject to court approval, but it requires Musk to step down as chairman of the board for at least three years and to pay a civil penalty of $20 million. He must step down from the chairman role within 45 days, but he will remain CEO. Tesla itself will also be slapped with a $20 million fine. It’s expected that Tesla will add two new and independent directors to the board.
“Musk tweeted on August 7, 2018 that he could take Tesla private at $420 per share — a substantial premium to its trading price at the time — that funding for the transaction had been secured, and that the only remaining uncertainty was a shareholder vote,” the SEC said. “In truth, Musk knew that the potential transaction was uncertain and subject to numerous contingencies. Musk had not discussed specific deal terms, including price, with any potential financing partners, and his statements about the possible transaction lacked an adequate basis in fact.”
More from the SEC: “The SEC also today charged Tesla with failing to have required disclosure controls and procedures relating to Musk’s tweets, a charge that Tesla has agreed to settle.”
Musk has continually tweeted himself and Tesla into hot water, but this obviously goes beyond bad PR or a drop in stock price. Part of the settlement is an agreement by Tesla that its board will “oversee” Musk’s communications with investors. It’s unclear if this means his tweets will be filtered before they hit the web. Whether the changes in Musk’s role and communications with investors will result in a better-run company remains to be seen.
Also remaining to be seen — the effect on the company’s stock price. It was down about 14 percent at closing time Friday, to $264 a share.
Mark Morrison on Sep 30, 2018
They deal had to be done. The board needs Elon to get the share price back up which will occur when the good quarter results are announced. Of course the fact that it will be another all hands on deck all pumped up result (seen the Bloomberg Tesla production tracker recently?) will get them in the position to raise the additional funds thst Elon has said are not needed while valuations are high. Company is still on track to be bankrupt or sold within 24 months. Probably both in that order
Latest Car ReviewsRead more
Latest Product ReviewsRead more
- Syke Thanks, somehow I missed that.
- 285exp I am quite sure that it is a complete coincidence that they have announced a $7k price increase the same week that the current administration has passed legislation extending the $7k tax credit that was set to expire. Yep, not at all related.
- Syke Is it possible to switch the pure EV drive on and off? Given the wonderful throttle response of an EV, I could see the desirability of this for a serious off-roader. Run straight ICE to get to your off-roading site, switch over the EV drive during the off-road section, then back to ICE for the road trip back home.
- ToolGuy Historical Perspective Moment:• First-gen Bronco debuted in MY1966• OJ Simpson Bronco chase was in 1994• 1966 to 1994 = 28 years• 1994 to now = 28 yearsFeel old yet?
- Ronnie Schreiber From where is all that electricity needed to power an EV transportation system going to come? Ironically, the only EV evangelist that I know of who even mentions the fragile nature of our electrical grid is Elon Musk. None of the politicians pushing EVs go anywhere near it, well, unless they are advocating for unreliable renewables like wind and solar.