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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..."
If you don't like the rules stay private.
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.
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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It's not about a tweet, it's about manipulating stock prices with false information.
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.
GENERATION 27: The first time you see this, copy it into your sig on any forum and add 1 to the generation.
It's not about a tweet, it's about manipulating stock prices with false information.
... on Twitter.
I agree with GPP: any information on social media is automatically assumed to be a lie that no reasonable person would believe.
Socialism: a lie told by totalitarians and believed by fools.
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.
Then feel free to do business somewhere else.
Your hair look like poop, Bob! - Wanker.
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.
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.
the SEC can arbitrarily fine someone 20 million dollars after an admission of no wrong doing
It's a settlement. Musk and Tesla agree to pay 20 mil. There is no admission of wrongdoing (which could trigger a number of other legal provisions). And Tesla agrees to do some BOD reorganization. The alternative is to fight it, have a court find Musk guilty, impose a fine and be subject to much more damaging penalties. It's primarily the guilty verdict that they want to avoid.
Have gnu, will travel.
Musk did not create Tesla.
Do you still pretend voting can reverse the corruption in our government? That has to be exhausting.
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.
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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?
Hopefully his post as CEO is next.
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.
This smells like the government's destruction of Tucker Motors on behalf of the Big Three.
"Elon! The cars...you made them too good!"
Strat
Progressivism (aka US 'Liberalism'): Ideas so good they need a police/surveillance-state to enforce.
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.
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
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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How do you do this if you want to keep your large shareholders in the game? They would be forced to halt trading in the stock once they have the information, which is untenable for a large fund.
He should have had better advice prior to doing anything, but that does get tricky... especially when you run things kind of by the seat of your pants...
Destroy Tesla... Start another Car Company... Easy Peasy for Musk.
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For making him a twit. :P
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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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The people who have the job of going after the people who run public companies and the people who have the job of going after unwanted Mexicans are totally different. Its very much possible for the US government to be doing both things at once.
With Musks twitter account being an official, registered, Tesla communication channel?
Will you soon pop up claiming that press conferences from Tesla should automatically be assumed to be lies?
I think you are confused. Severely so.
He can still go to jail. The SEC could stop him from leading any company for a long time and could give high fines, not give him jail time. Criminal investigations are done elsewhere and this deal doesn't affect that.
I don't think RMS is a SJW dictator. .... considering that he was attacked almost a decade ago by SJW's .... I seriously doubt he's all that sympathetic to their tactics and authoritarian speech codes.
That does not mean he is not a SJW. You are assuming that all SJWs exactly agree with each other. But RMS does enough to qualify as a SJW just by persisting in using "she" as a general personal pronoun; I usually stop reading his rants in irritation at that point - anyone can simply use "they" as a long-established non-gender pronoun if they wish.
The company he created is more important than it's creator.
He did not create Tesla, he bought into it.
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.
That's one interpretation.
The other is: Musk lied to the world about the potential of investment in his company.
You can't do that. It's illegal. You can hype, but you can't lie. That's why it's always "we believe...", "we forecast...", "we predict...", "we want to be..."
He's not being held to any rules different to everybody else. And it has little to do with gullibility of investors. Hell, people would have profited from jumping on the hype train and getting out before other people realised what they already knew.
He's being held to account for straight-out lying about what the company were doing, as the CEO of the company.
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?
Yes. Social media: all lies. Official, presidential, or otherwise, still automatically lies.
Socialism: a lie told by totalitarians and believed by fools.
Ok. An SJW is an activist busybody who feels completely correct in both telling and compelling others how to think and act. They are highly offended by pretty much anything but especially at the notion of someone disagreeing with them. They are the ultimate stereotypers, believing that one's group (usually immutable things like race, gender, sexual orientation, etc) literally define a person, both on their side and their opposition.
SJWs stop at literally nothing to silence their opposition, routinely engaging in tactics like going after a person's employment even when the thing they're upset about had nothing to do with someone representing an employer. SJWs are also behind high profile harassment of people eating dinner, of disrupting Senate hearings, of illegally invading college offices for the purpose of intimidation, etc.
The concept is to make such people afraid to even have any opinions, let alone voice them. They count on the reluctance of authorities to be seen as attacking women and minorities as cover for their illegal behavior, thus unironically claiming for themselves special rights that others in the population do not have because SJWs do not hesitate to use authorities against their opposition if they can.
One manifestation of this is how people who support Donald Trump are reluctant to put stickers on their cars, signs on their homes, and even wear MAGA clothing because of multiple widespread documented cases of vandalism and violence. You see liberal and leftist campaign materials untouched around the nation because the opposition does not engage in these tactics and yet they claim the opposition are fascists.
These tactics are similar to those used by the early Nazi party when they were trying to gain power, and yet SJWs call their opposition Nazis routinely.
It is worth noting that the thoughts and opinions of people the SJWs claim to fight for are functuonally irrelevant to them. What is important is that they be SEEN standing up for some group they identify as victims (hence the term "virtue signaling").
Black people, gay people, etc. who disapprove of their antics as counterproductive or who believe that they don't need any help from purple haired leftists are routinely villified. When the right says that leftists want to keep blacks on the plantation this is what they're referring to.
I could go on, but SJWs are reprehensible, vile, self-righteous people with an 'any means necessary' attitude reminiscent of religious ferver who find no shame in anything they do and are capable of espousing literally any position so long as it's opposite of whatever group they choose to oppose.
So I'm sorry you don't like people using a three letter term to represent all of that, but it does get a bit unwieldly to say all the time.
One manifestation of this is how people who support Donald Trump are reluctant to put stickers on their cars, signs on their homes, and even wear MAGA clothing because of multiple widespread documented cases of vandalism and violence. You see liberal and leftist campaign materials untouched around the nation because the opposition does not engage in these tactics and yet they claim the opposition are fascists.
These tactics are similar to those used by the early Nazi party
MAGA is a far right wing political movement. Its opponents include moderate Republicans as well as Democrats and others. The majority of Americans disagree with MAGA policies related to taxation, health care, immigration, foreign trade and political isolationism.
The critical thing to realize is that the people who disagree with MAGA are typical Americans. They're not extremists. They're not the mythical leftists that extremists paint as the boogeyman (seriously, does *anyone* in their right mind see the USA as a hotbed of socialism or communism?). They're just normal people who want a good life.
MAGA bumper stickers, signs and clothing are offensive to the average American, in much the same way that wearing a t-shirt in support of the KKK is offensive. Americans must have the freedom to stand up and and declare, "I do not believe in your extremist policies. You do not speak for me. You do not speak for the majority."
To spend with his kids, hopefully. He probably needs it.
[($)]
and take Tesla/ New company private. Everyone's an Idiot when $'s involved thats why we hire accountants to handle our billions. :)
[($)]
40 million USD for a company that loses over a billion USD a year isn't even a slap on the wrist.
It's sort of like "politically correct" - it's not a well-defined term, it's just an insult that some people use and so it means whatever they want it to mean. Insults are like that, if you think about every time you've ever called someone an idiot: were they all really "a foolish or stupid person"? Or perhaps some of them just did a foolish or stupid thing. Or maybe not even that, maybe they did something which wasn't foolish but which you disliked for some other reason.
When I first heard the term SJW I thought it was clever. It's a better insult than most, much better than "politically correct," there really are people who thrive on outrage. It was driven into the ground very quickly though. As with Linus Tovalds' recent behavioral change: the term might be a good one but the people who use it create too much negative overhead.
In all honesty.. please define a SJW.
I'll take a stab at it. A SJW is someone who ostensibly supports social causes, but shows hypocrisy by one or more of the following:
1) neglects some basic morality or fairness in the causes they choose to support (for example, supporting their favorite cause over another which has greater need or is more deserving)
2) makes a game of oppression, where the most oppressed must be believed to be more correct in every discussion
3) tries to achieve their goals with quasi-violent tactics like lying, vandalism, ruining reputations, or ruining careers
4) claims to support social justice but actually only picks fights for their own satisfaction
5) lying in discussions about social issues
6) virtue signalling (as opposed to taking actions which achieve social goals)
7) advocating exclusively for one's own group rather than for fairness
Aside: why are lying and violence hypocritical? Because if the goal is fairness (and it should be, lest we advocate sexism and racism in favor of one's own group), honest conversation is the only path forward. Free exchange of ideas, perspectives, and hard data and statistics is the way we discover what is right and fair. A person that advocates fairness has no credibility if he lies, misquotes, or puts words in someone else's mouth.
A cat can't teach a dog to bark.