Elon Musk Settles SEC Fraud Charges, Must Step Down As Tesla's Chairman

Soon after it was reported that the Securities and Exchange Commission (SEC) sued Elon Musk for making false statements related to his abandoned efforts to take Tesla private, the SEC announced today that Elon Musk has agreed to settle the fraud charges. In a press release, the SEC says "Musk and Tesla have agreed to settle the charges against them without admitting or denying the SEC's allegations." The settlements, which are subject to court approval, require the following:

- Musk will step down as Tesla's Chairman and be replaced by an independent Chairman. Musk will be ineligible to be re-elected Chairman for three years;
- Tesla will appoint a total of two new independent directors to its board;
- Tesla will establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk's communications;
- Musk and Tesla will each pay a separate $20 million penalty. The $40 million in penalties will be distributed to harmed investors under a court-approved process.

Slashdot reader Rei writes: In the wake of initially refusing a settlement offer over the wording, Elon Musk has now settled today with the SEC, concerning his tweets about taking Tesla private. As per the settlement agreement, there is 1) no admission of wrongdoing; 2) Musk and Tesla will each pay a $20 million fine; 3) Musk will remain as CEO of Tesla; 4) Musk will be prohibited from serving as chairman of Tesla for three years; and 5) Tesla must appoint two new members to its board of directors. An additional clause seems apropos: Musk must "comply with all mandatory procedures implemented by Tesla, Inc [...] regarding (i) the oversight of communications relating to the Company made in any format, including, but not limited to, posts on social media..."

Comments

Re:I see...,

[sunking2]

If you don't like the rules stay private.

Musk is still CEO

[duckintheface]

He will still be running the company and he may yet take it private. This is a victory for Musk. The SEC backed down from insisting on removing his as CEO.

Re:Musk is still CEO

[bill_mcgonigle]

SEC has no problem with forcing on the company things that its shareholders don't want.

The whole point of any regulatory body is to protect people from their "own stupidity".

Now, you might argue that the bureaucrats at the SEC don't know what's better for Tesla than its shareholders, but those bureaucrats would strongly disagree and they have the power to punish anybody who disagrees with their omniscience.

Just a friendly reminder

[rsilvergun]

not to screw with wealthy, well connected investors. For those of you playing at home Enron & Bernie Madoff did just fine ripping off little old ladies of their life savings until they got greedy and big heads & went after bigger fish.

Re:Just a friendly reminder

[PPH]

not to screw with wealthy, well connected investors.

Like public pension funds. When you think fat, rich, greedy bastards, think CALPERS before you think Rockefeller.

Re:Double standard

[balsy2001]

He is not a private businessman. Tesla is a publicly trade company, which comes with rules. He shouldnt have done an IPO to raise money if he wanted to be a private busniessman.

Re:Your nerd gods are in hell

[Anonymous Coward]

I don't think RMS is a SJW dictator. His politics are left, but considering that he was attacked almost a decade ago by SJW's for a lame EMACS virgin joke that he sometimes told at speaking gigs, I seriously doubt he's all that sympathetic to their tactics and authoritarian speech codes.

Re:I see...,

[known_coward_69]

Legally he isn't allowed to talk about taking the company private to anyone without a need to know about the transaction. If he said the same thing at a party instead of tweeting it, same result.

30 years ago this might have been OK, but now it's market moving info and you arrange the transaction in secret and announce it once it's done.

CNN on Tesla

[Anonymous Coward]

https://money.cnn.com/2018/09/28/technology/tesla-stock-analysts/index.html

Summary: stock price plunging, expected to keep falling to $200-225/sh.

Company's ability to raise needed $2B by 4Q to avoid bankruptcy in doubt.

Re: I see...,

[Anonymous Coward]

Musk did not create Tesla.

Swift

[Waccoon]

Well, that was quick. A billionaire CEO of a major corporation, who can influence untold amounts of money in stocks, can get a settlement within days of the public announcement that he would be sued. It amounts to a slap on the wrist.

I wonder how many years an ordinary person would be dragged through the mud over a shady business deal amounting to a few thousand. They'd probably have to register for a sex offender list, just to be on the safe side.

Re:I see...,

[bill_mcgonigle]

30 years ago this might have been OK, but now it's market moving info and you arrange the transaction in secret and announce it once it's done.

It's great how the SEC is there to keep shareholders of public companies in the dark about what's going on in the companies, especially when they all have equal access to that information. I know, I know, the institutional investors need to have priority access so the poor schmucks at retail don't stand a chance.

Elon got governmented good and hard. A shame; he can get back to productive private-sector business now, though, so there's a silver lining. But we all learned a few lessons on this one.