As Tesla Board Circles the Wagons, Report Claims Musk Backed Out of SEC Settlement

Yesterday’s end-of-day fraud lawsuit filed against Tesla CEO Elon Musk by the Securities and Exchange Commission needn’t have happened, CNBC reports. The CEO and founder turned down a settlement deal that would have seen him pay a “nominal” fine and remove himself as chairman, sources claim. Instead, Musk did what he does best. He went his own way, greatly increasing risk both to himself and his company.

Still, Tesla’s board stands by its man, releasing a statement late Thursday to this effect. According to Bob Lutz, outspoken industry titan, the board should have told Musk to hit the bricks.

Had Musk signed on to the settlement, he wouldn’t have had to admit guilt for tweeting “funding secured” on August 7th, part of an ultimately ill-fated attempt to take Tesla private. The settlement would, however, have kept Musk from the chairman’s position for two years, while compelling the automaker to hire two independent directors.

“This unjustified action by the SEC leaves me deeply saddened and disappointed,” Musk said to CNBC. “I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

Says the man who accused a British rescuer he’s never met a “pedo” on Twitter, apologized, then called him a “child rapist” and dared him to sue, eventually getting his wish. It’s hard to ignore recent controversies at times like this, and Musk’s tendency for spur-of-the-moment social media bozo eruptions certainly doesn’t help his case.

In its lawsuit, the SEC claims Musk mislead investors and failed to inform the Nasdaq when he tweeted, in the middle of a trading day, his plan to take Tesla private at $420 a share. Yes, it turns out that is a drug reference. Interest expressed by Saudi Arabia’s sovereign wealth fund apparently led Musk to believe the money would be there when he needed it. That potential funding wasn’t as secured as the CEO claimed. Musk abandoned the go-private bid on August 24th.

In a statement, Tesla’s board wrote,”Tesla and the board of directors are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful U.S. auto company in over a century. Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees.”

Feel free to discuss that awkward “over a century” line.

Should a judge rule in the SEC’s favor, Musk won’t just be gone from the chairman’s seat. The agency wants Musk barred from serving as the director of a public company. Tesla’s stock dropped more than 11 percent in early Friday trading.

If it was left up to Bob Lutz, Tesla’s board would thank Musk, then tell him to step down. The company is a “disastrous mess,” Lutz said while appearing on CNBC.

[Image: Tesla]