Coming under pressure from his lawyers and investors of Tesla, tech billionaire Elon Musk has agreed to step down as chairman of the company for three years and pay a $20 million fine in a deal with the U.S. stock market regulatory authority, Securities and Exchange Commission (SEC), to resolve securities fraud charges. The $40 million in fines will be distributed to investors who claim to have been financially harmed by Musk's premature communications. The SEC also filed papers that charged Tesla with failing to exercise proper oversight over Musk's actions and laid out a separate settlement of those charges.
Musk and Tesla have agreed to settle the charges against them without admitting or denying the SEC's allegations. Neither responded to requests for comment.
The SEC, after filing the lawsuit went on to show the sad state of the meeting between Musk and the fund and was found quoting, "lacked discussion of even the most fundamental terms of a proposed going private transaction". The SEC cited "significant market disruption" as the primary repercussion of Musk's loose lips, as well as questioning Tesla's dissemination of information.
Musk's tweets and the idea of taking the company private was clearly aimed at the "short-sellers" who have made Tesla the most targeted stock on the USA market, and created an industry in social media campaigns against the company and Musk himself. According to SEC, this settlement will assist Tesla to strengthen its corporate governance and protect its investors. He'd be barred from taking back the chairmanship for three years, but he can continue to serve as Tesla's CEO.
And while it's bad news for Musk, people on Twitter have been quick to point out how a single tweet lost the world's leading electric vehicle company its visionary chairman. Musk has said that he expected Tesla to achieve positive cash flow and profitability in the quarter, which ended on Sunday.
The outcome calls for Mr. Musk to step down as chairman and for Tesla to. The SEC initially was ready to accept a fine of a few million dollars and Musk's removal as chairman for two years, but raised its demands after Musk balked at that offer, the person said.
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