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.
[Image: JRE/YouTube]
Tim Healey grew up around the auto-parts business and has always had a love for cars — his parents joke his first word was “‘Vette”. Despite this, he wanted to pursue a career in sports writing but he ended up falling semi-accidentally into the automotive-journalism industry, first at Consumer Guide Automotive and later at Web2Carz.com. He also worked as an industry analyst at Mintel Group and freelanced for About.com, CarFax, Vehix.com, High Gear Media, Torque News, FutureCar.com, Cars.com, among others, and of course Vertical Scope sites such as AutoGuide.com, Off-Road.com, and HybridCars.com. He’s an urbanite and as such, doesn’t need a daily driver, but if he had one, it would be compact, sporty, and have a manual transmission.
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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
He's a man of vision that achieved a lot but it seems like he's on a downward spiral, wallowing in his own reality distortion field. Maybe this will be the ego deflation he needs to right his own ship.