Business & Tech
Musk, Tesla, SEC Agree To Settlement
Musk will step down from his post as chairman of the company as part of the settlement, the SEC said.
NEW YORK, CA —Elon Musk, the flamboyant and innovative chairman of Tesla, Inc., will step down from that post with the electric vehicle maker as part of a settlement with the U.S. Securities and Exchange Commission over securities fraud changes brought against him last week.
In a statement, the SEC also said Saturday that it has charged Palo Alto-based Tesla with failing to have required disclosure controls and procedures relating to Musk's tweets, which the SEC said Musk has also agreed to settle.
Musk will remain as CEO for Tesla, which builds its cars at a plant in Fremont.
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The SEC complaint alleges that Musk's Aug. 7 tweet that he could take Tesla private at $420 per share was misleading and premature. Musk's indication that funding for that action had been secured and that it hinged
only on a shareholder vote were also misleading, according to the SEC, which also alleges Musk knew the privatization was far from certain.
The SEC noted that Musk's tweets caused Tesla's stock price to jump 6 percent that day, resulting in "significant market disruption."
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Under the settlement, Musk personally and Tesla will each pay a $20 million penalty, with the combined $40 million being paid to Tesla's investors whom the SEC said were victims of Musk's misleading tweets.
Neither Musk nor Tesla admit or deny any of the SEC's allegations as part of the settlements.
Specifics of the settlement also include Musk being ineligible to seek re-election to the chairman post for three years; Tesla's appointment of two new independent directors to its governing board; and that Tesla will establish a new committee of independent directors and enact additional controls and procedures to oversee Musk's communications.
The settlements are subject to court approval, the SEC said.
— Bay City News; Image by Maggie Avants, Patch
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