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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..."
- 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..."
Linus stepped down and went to some feel good shit, RMS is full blown SJW dictator and now Elon Musk pays the consequences for his stoned tweet
this is great!!!!!!
The company he created is more important than it's creator. So, the government can arbitrarily tell him that he must step down? I'd be very pissed.
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.
"He took a duck in the face at 250 knots." -- William Gibson, Pattern Recognition
So, as I understand it, Musk can't be "Chairman" of Tesla for the next three years, but he can remain as "CEO". Could someone who understands what the difference between these two posts is possibly explain it for the benefit of those of us - particularly from outside the USA - who don't. What does this mean is practice about the reduction (if any) if Musk's influence over Tesla.
As this is happening in America, I'm assuming the SEC is acting in the interest of a large company or companies.
Now what? I even bought a 3D printer so I can build anything I need on Mars! Is my ticket still good?
So, the capsule summary here: a single drunk-tweet ended up costing Musk+Tesla a cool $40 million.
It's a good thing I don't use Twitter. I can't afford that kind of cash.
Musk and Tesla will each pay a separate $20 million penalty. The $40 million in penalties will be distributed to harmed investors under a court-approved process.
Those are some expensive tweets.
Oh brave new world, that has such social media in it!
not to screw with wealthy, well connected investors. For those of you playing at home Enron & Bernie Madoff did just fine ripping off little old ladies of their life savings until they got greedy and big heads & went after bigger fish.
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So a private businessman makes statements that 'lacked an adequate basis in fact', and gets fined 20 Million$.
But the President....?
When the wealthy are criminals they buy their way out. Thanks Rethuglicans!!!
This is insane. An unelected body that is the SEC can arbitrarily fine someone 20 million dollars after an admission of no wrong doing, then tell them they can't sit on a board for 3 years? That crap has to go, and quickly!
Aaaaaaand Ol Musky rejected it at the last second, says he isn't being "True to himself". Dis gonna be gud.
Elon's net worth is ~20 billion, so 20 million is 0.1%, this is the equivalent of you the reader going out and buying an OK suit.
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.
I hope the pedo guy doesn't settle for some no-admission of guilt bullshit.
And both Musk and Torvalds have mostly been showboaters rather than idealists for their whole careers. So has ESR for that matter, although he's somehow still here too.
SEC appointed a new boss for Elon Mask, am I right? So he will go for weekly meetings with reports to the new chairman?
lol
Musk wanted to step down as chairman of Tesla in any case.
Even a billionaire doesn't want to lose $40 million for a single tweet on Twitter. ($20 million for him, $20 million for his company).
Any bets this was paid for ? It's been happening with a lot of companies lately.
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.
Here I thought Musk's plan was to get investigated by the SEC, thus causing Tesla's shares to tank, which in turn would make it much less expensive to take the company private.
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
Likely he had an offer but his definition of a solid offer and the SEC's legal definition of are two different things (this is why you run things past lawyers 1st.) I heard some rumor he was working too much and was thinking of giving up the chair anyway. What has to be pissing him off is the appointment of outsiders to the board; which makes one think that there are other forces at play. Aside from him strongly feeling he did no wrong since he thought he had a legit offer.
He should have gone private while he had a the chance. Moving forward on that would have turned the offer from laymen terms into legal terms while having the Saudi's with a controlling stake in the company-- that may have been safer than what happens next.
Democracy Now! - uncensored, anti-establishment news
So you bought 100 shares at 265. Are you hoping they'll rise in the short term and then blow them off, or are you looking for a long term capital gain? I assume you aren't in it for dividends. What is your exit strategy?
Elon is a dreamer. He didn't even gain anything from his tweet, did he? If this somewhat careless tweet costs 40M, how come Trump isn't broke by now?
put in place additional controls and procedures to oversee Musk's communications
Too bad the orange one doesn't have something like that.
He just lost his whole embodiment. Who is he now? If you cave into a corrupt people, you lose self forever.
Hopefully his post as CEO is next.
40 Mio for the fun of just one tweet. And practically no damage done, except by the SEC press conference.
WTF?!
Where I come from 40 Mio in free cash flow takes some 1000 employees a full year to generate.
We'll never get away from our depending of gasoline, oil, and non-renewable sources.
I can see Tesla falling soon.
For most of my career I've founded and run companies, always companies doing something new and different. I didn't mind the risks involved, and I enjoyed trying to accomplish something that no other company had done. I was pretty good at starting companies but not as good at running them after they got going and were somewhat stable.
I think in some ways Musk is similar - as soon as he has one company up and going, even being *on its way* to having a saleable product, he goes off and starts another company. He likes starting companies, and he's good at it.
After one of my companies was up and going, making sales of a good product for several years, I realized I'm not great at running a business. Market strategy, strategies partnerships, etc aren't my thing. I probably should have sold the company, but again finding a buyer and negotiating the sale of a company isn't my thing I'm better at starting them, getting them off the ground. So one thing I looked into doing was getting people who ARE good at those, people who were running successful companies, and having them on my board. They'd meet maybe four times per year and have emails and phone calls throughout the year. If the board unanimously decided that something I as CEO wanted to do was stupid, they could override me. That might we'll have been good for me, to have a panel of successful business people having some oversight over my decisions and giving their opinions on major matters. It could be good for Musk as a stockholder too. He's good at thinking big and he's good at promotion, at getting media attention, but that doesn't mean all of his business decisions are the very best. Tempering him with independent board members could make his company more successful.
A thought just occurred to me. Musk thinks big, he really likes to do things on a huge scale. He's good at getting attention from the media and others. Guess who else is good at getting attention and likes to do everything yuge? :)
They tend to make pretty damn safe investments and don't usually get dragged into stuff like this. Did you just want to make a generic attack on pensions? Why?
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Destroy Tesla... Start another Car Company... Easy Peasy for Musk.
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For making him a twit. :P
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I will feel safe at night knowing the government of the United States has its priorities right and is attacking the neferious neredowell and not worrrying about the army of Mexican nationals flooding across the Southern border of the United States.
Down with the symbol of white privelge and toxic male masculinity that is Elon Musk.
So... gamblers ... well gambled on a stock.
The stock became highly volatile because a loud mouth visionary hyped the share like mad and hit filthy rich doing it. And somehow along the path of whoring himself to gamblers, he managed to build 3 (or 10 depending how you see it) major companies.
Each morning a billion people wake up to see news papers full of mass negativity. In The NY Times, there is 99 pages of bashing Donald Trump, the republicans and Theresa May for good luck... and there are 2 pages dedicated to cookie recipes and Elon Musks crazy visions of a better future regarding reaching for the stars while we watch him actually do it.
And then Elon, basically a man who makes children dream and believe they can one days fly a red sports at to Mars letâ(TM)s his lips flap and it messed up the clock work up down up down rythem of the shares of Tesla and now the gamblers who donâ(TM)t invest in the company but instead invest in the short term volatility of the share cry to the gambling commission that they didnâ(TM)t like volatility after all... and now the company has to hire some boring ass guy in a suit to make the Tesla stock stabilize.... basically allowing the shorters force the share to predictably ride the slope down into the ground.
Oh and now Musk has to have someone follow him around and make sure he does lot accidentally speak with passion and excitement about his ventures that make governments around the world feel passion too.
I actually donâ(TM)t like Musk... but I do like his passionate madness and Iâ(TM)m offended that some cry baby gamblers have managed to make him wear a muzzle.
#The system works?
what I see most commonly when folks talk about unsustainable pensions is that the pension has been raided by someone. That's what happened to Hostess. It was doing just fine until the owners of the company used a downturn in the economy to get employees to agree to give up most of it. Eddy Lambert, owner of Sears, is currently trying to do the same thing, claiming that the pension is why Sears is failing (and not his mismanagement or that he keeps selling off their best brands).
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3 years from now his first tweet after reelection as Chairman should be that he is moving Tesla to Ireland: FU SEC!
Power tends to corrupt, and absolute power corrupts absolutely.
this is what happens when you "hurt" the investment banks and mega-rich that were shorting Tesla
A board of directors is the Capitalist version of the Politburo, or the Politburo in a Communist government is like a corporate board of directors.
Actually, there is the Central Committee to which the Politburo reports, but you get the idea.
In a political democracy, which neither a Communist government or a Capitalist corporation are, you don't have such a thing, but you have various checks-and-balances such as an independent judiciary or a bicameral (two-house) legislature or three-branch legislature-executive-judicial system.
A family member served on the board of directors of a shopping mall. The board hired a mall manager who had a more-than-full-time job actually running the place, but the board would meet once a month to discuss "how the mall was doing" -- were there rental vacancies or did new tenants replace the ones who left or were kicked out? Is the nail salon underreporting their income and underpaying the profit-based portion of their rent?
I too wonder about having the CEO also serve as Chairman-of-the-Board. In Catholic parishes, the parish priest typically serves as Chairman of the Parish Council whereas is Protestant churches, the pastor is regarded more as a church employee rather than having special status under Apostolic Succession? Protestant churches can hire and fire their pastor whereas a Catholic parish pretty much has to work with the priest assigned to them by the bishop? So how much independence does a Catholic Parish Council have with the priest sitting right there and what Catholic-in-good-enough-standing-to-get-elected-to-Council is going to disrespect their priest?
I also wondered how the Politburo functioned under Stalin -- https://en.wikipedia.org/wiki/... -- members of this Communist version of a Board of Directors starting ending up dead when they disagreed?
So even corporate boards can have varying degrees of independence or lack thereof from the guy-in-charge? So let's just hope the new Tesla board members stay healthy?
Didn't these other guys (Eberhard? Straubel? Maybe Tarpenning?) found Tesla, or at least the started some kind of electric car company is a garage before Musk came along?
At the very least, Musk is the Jobs and some other dudes or dudettes are the Woz of Tesla? But hasn't Musk glommed on to the limelight; is he the Stalin of Tesla?
There must be a lot of really smart people at Tesla and SpaceX, but I guess Elon Musk is the public face and the "visionary." I am getting to think that Tesla needs to move on from Tesla, and I am told that is already the case at SpaceX with Gwynne Shotwell running that place?
ever come up for air?
CalSTRS has a shit load of money in Tesla.
Tesla is a money losing, cash negative, debt ridden failure that ONLY has been around as long is it has because Musk is able to convince stupid people to keep dumping money into the bottomless pit of Telsa.
Tesla, the posterboy for the sunk costs fallacy.
Meaning Tesla is a very risky (unsafe) investment - Musk said so himself! - and CalSTRS are a bunch of morons to be risking pension money on it.
He store half a billion dollars and got a slap on the wrist. Cute.
The short sellers got caught with their pants around their ankles, and cried foul. Fuck em.
"No admission of guilt"
40 million USD looks like "guilt" to me.
Should not Tweets be considered rumors or "hearsay"? Unless there is an official proclamation from a company I would consider it "hearsay".
Again, fuck you short-sellers and Hedge-fund parasites.
To spend with his kids, hopefully. He probably needs it.
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and take Tesla/ New company private. Everyone's an Idiot when $'s involved thats why we hire accountants to handle our billions. :)
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Not directors. Shareholders voted down the resolution to add more directors. 85% of shares voted against the proposal.
There was NO shareholder vote.
You are a liar and the morons who keep modding you up are clueless imbeciles.
If you care even a little about your company, its products and its future, never ever go public.
You lose your company to myopic sociopaths that will happily make a buck by destroying everything you built.
Going public is akin to going full retard.
numbnuts