Elon Musk resigns as Tesla chairman to settle SEC fraud case - Rickey J. White, Jr. | RJW™
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Elon Musk resigns as Tesla chairman to settle SEC fraud case

29 Sep Elon Musk resigns as Tesla chairman to settle SEC fraud case

Posted at 19:09h in Popular Newsfeed by
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The Securities and Exchange Commission said Saturday that it reached a proposed settlement of securities fraud charges against Tesla Chairman Elon Musk that would force him to resign his position from the board chairman and levy $40 million in penalties.

Tesla’s stock has been in a free fall since Musk teased, via Twitter, that he was taking the company private—statements the government said were false and damaging to shareholders. Musk, who will remain CEO, has insisted he had a gentleman’s agreement with the Saudis that fell through. Musk will not leave the board entirely.

“As a result of the settlement, Elon Musk will no longer be Chairman of Tesla, Tesla’s board will adopt important reforms—including an obligation to oversee Musk’s communications with investors—and both will pay financial penalties,” said Steven Peikin, co-director of the SEC’s Enforcement Division, in a statement. “The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders.”

From the SEC statement:

  • 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.

“The total package of remedies and relief announced today are specifically designed to address the misconduct at issue by strengthening Tesla’s corporate governance and oversight in order to protect investors,” said Stephanie Avakian, co-director of the SEC’s Enforcement Division.

The settlement is subject to court approval, which is expected.


Source: Fast Company

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