Elon Musk, who was under tremendous pressure within Tesla and from company shareholders for putting the company’s future at risk via his ‘Going private’ tweets, has finally reached a settlement with the SEC.
In a deal, which has reportedly been brokered by one of Tesla’s lawyers, will now see both Musk and Tesla paying a fine of $20 Million each. The deal will also see Elon Musk stepping down as the Chairman of the electric vehicle company. He will also have to refrain form taking that position for the next three years.
Additionally, two independent directors shall also be appointed on Tesla’s board and will take measures to monitor every communication that happens between Musk and the company’s investors. In settling, Musk neither admitted nor denied misleading investors under the civil fraud charge. This basically implies, that he can not later talk about not doing anything wrong.
The terms of the settlement are slightly tougher than what Musk had allegedly rejected on Thursday, which called for a two-year bar on serving as chairman and a $10 million fine.
There’s still a saving grace though, in this entire deal. Musk will continue to serve as the chief executive of the company, thus still leading operational and management control of Tesla. What will also help Tesla and Musk, is the fact the company has not been charged with fraud.
The S.E.C. announced the deal two days after it sued Mr. Musk in federal court for misleading investors over his post on Twitter last month that he had “funding secured” for a buyout of the electric-car company at $420 a share from Saudi Arabia. A lawsuit was already being speculated as soon as Musk tweeted his plans of making Tesla private.
Jay Clayton, the S.E.C. chairman, said the settlement with Mr. Musk and Tesla sent a message that “when companies and corporate insiders make statements, they must act responsibly, including endeavouring to ensure the statements are not false or misleading.”