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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.
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.
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.
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.
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 $2B by 4Q to avoid bankruptcy in doubt.
Musk did not create Tesla.
Well, that was quick. A billionaire CEO of a major corporation, who can influence untold amounts of money in stocks, can get a settlement within days of the public announcement that he would be sued. It amounts to a slap on the wrist.
I wonder how many years an ordinary person would be dragged through the mud over a shady business deal amounting to a few thousand. They'd probably have to register for a sex offender list, just to be on the safe side.
Here I thought Musk's plan was to get investigated by the SEC, thus causing Tesla's shares to tank, which in turn would make it much less expensive to take the company private.
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
So you bought 100 shares at 265. Are you hoping they'll rise in the short term and then blow them off, or are you looking for a long term capital gain? I assume you aren't in it for dividends. What is your exit strategy?
Elon is a dreamer. He didn't even gain anything from his tweet, did he? If this somewhat careless tweet costs 40M, how come Trump isn't broke by now?
30 years ago this might have been OK, but now it's market moving info and you arrange the transaction in secret and announce it once it's done.
It's great how the SEC is there to keep shareholders of public companies in the dark about what's going on in the companies, especially when they all have equal access to that information. I know, I know, the institutional investors need to have priority access so the poor schmucks at retail don't stand a chance.
Elon got governmented good and hard. A shame; he can get back to productive private-sector business now, though, so there's a silver lining. But we all learned a few lessons on this one.
My God, it's Full of Source!
OUTSIDE_IP=$(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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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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Yes. Social media: all lies. Official, presidential, or otherwise, still automatically lies.
Socialism: a lie told by totalitarians and believed by fools.
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."