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Elon Musk Pulled Out of Settlement With SEC At Last Minute (cnbc.com)
Sources have shared some new details with CNBC relating to the recent SEC charges against Tesla CEO Elon Musk. Yesterday, U.S. securities regulators sued Musk for allegedly making false statements related to his abandoned efforts to take Tesla Motors private. Now, according to CNBC, Tesla and the SEC were close to a no-guilt settlement but Elon Musk pulled out at the last minute. From the report: Under the deal, Musk and Tesla would have had to pay a nominal fine, and the CEO would not have had to admit any guilt, the sources said. However, the settlement would have barred Musk as chairman for two years and would require Tesla to appoint two new independent directors, CNBC's David Faber, citing sources. Musk refused to sign the deal because he felt that by settling he would not be truthful to himself, and he wouldn't have been able to live with the idea that he agreed to accept a settlement and any blemish associated with that, the sources said. Musk called the SEC's allegations "unjustified" and that he acted in the best interests of investors. "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," said Tesla's board of directors in a statement.
Check out Albert Dunlap and John Schiller, both permanently banned from holding an executive position in publicly traded companies due to fraud and fiscal issues (like stock manipulation). They can, and have, gotten CEOs and senior executives banned from holding director positions - and Musk is running a big risk of that happening to him.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
First, IANAL. With that said...
This is a civil action, not a criminal one. Thus, even if he loses Musk does not become a felon and (I'm pretty sure) doesn't lose the security clearance that he needs for his SpaceX activities.
The SEC can ban him from serving as CEO or chair of a publicly traded company; they can remove him from top spot at Tesla, but not from SpaceX which is privately held.
Contrary to what many imagine, Tesla would not implode without Elon Musk. He probably thinks it would, because monumental ego, but he's wrong. Tesla is already set up to be a gold mine, a money-printing machine. It's not just the Model 3 that's on track to be profitable, but also the utility-scale battery storage systems. They haven't got a lot of press, haven't generated much drama, but since the facility in Australia proved wildly successful, demand for those is going to explode.
If this investigation causes the stock to tank, I'll call it a great opportunity to buy in.
Forgot to add...
I believe the SEC will also need to prove that Musk *intended* to manipulate the stock price with his dumb tweet. (There's no law against just being dumb.) I don't think Musk actually was trying to manipulate the stock, and how they're going to make they're argument I'm not sure. This may not be the slam-dunk that some people expect.
Furthermore, the SEC action may cause far more upheaval in Tesla's stock price and more harm to investors than the incident they are suing over. Is that really sensible? But you know, they want to make an example... They've said as much. This is about regulatory muscle-flexing and generating headlines.
He must have evidence that he discussed the price ($420) with someone who agreed to buy the exiting stock at that price. My guess is he shows a letter of intent, memorandum of understanding, or at least a confirmation email from them to the SEC (and the public), and he gets a slap on the wrist because the SEC will say "funding secured must mean it's in an escrow account", or something like that. If he's got nothing, he should have taken the deal.
I do wonder if they are trying to bar him from taking SpaceX public (since he would be restricted in his seat at public companies).