Looks like one careless tweet has costed Musk dearly!
Pursuant to recent reports, Tesla (NASDAQ: TSLA) and its CEO, Elon Musk have to bow down to charges and have acquiesced to pay $40 million along with subsequent concessions. This comes as a repercussion to the government lawsuit against Musk, alleging that he has deceived investors by using misleading statements about a proposed buyout of Tesla.
However, the concessions that follow have given Musk a sigh of relief. The Securities and Exchange Commission asks Musk to remain the CEO of Tesla but only if he steps down from the position of Chairman for three years.
Elon Musk Tweet: The Reckless, Expensive Tweet!
“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,” Stephanie Avakian, Co-Director of the SEC’s Enforcement Division.
The U.S. Securities and Exchange Commission states that as a mode of settlement with Elon Musk over his series of inane tweets earlier August, it has alleged a series of concessions. These 7 tweets about taking the company private have proven to be pricey enough and Tesla and Musk combined have to pay a hefty price of $40 million to settle the case.
The SEC now has been unflinching about its decision since the tweets were misleading enough, given the fact that it was about a long-gone, abandoned plan. If this doesn’t hurt the board where it hurts, SEC has also pondered over the probability of removing him as an officer of the company.
“Not Guilty” Over a Pricey Charge?
Elon Musk, however, is found shrugging off all the allegations made against him. Bolstered further by the company board’s support, he turns thumbs down to anything being done wrong at all, let alone, done by him.
The Wall Street Journal reported on Friday that Musk apparently had a verbal deal with Saudi Arabia’s sovereign wealth fund for considering Tesla’s taking-on as a private space, on the records.
The SEC, after filing the lawsuit went on to show the sad state of the meeting between Musk and the fund and was found quoting, “lacked discussion of even the most fundamental terms of a proposed going private transaction.”
In response to this current wave of bustle, the company, as well as Musk, haven’t released any statement or tweet.
The Complaint, The Settlement and All That Jazz!
Musk tweeted on August 7, 2018, that he could take Tesla private at a substantial premium price, accounting to $420 per share. He went on to claim that the funding is already in a secure state but seeks a shareholder vote.
However, SEC alleged that Musk has duped investors since he was completely aware of the fact that the potential transaction wasn’t that secure. To make it worse, Musk didn’t even discuss certain terms and conditions that underlined risks and contingency in the possible transaction.
According to the SEC’s allegations, this misleading tweet has disrupted the market, causing Tesla’s stock price to rise by 6 per cent.
To play safe, without further ado, Musk and Tesla have agreed to settle the charges.
Wrapping the pricey penalty in a nutshell, this will include:
- Musk will need to step down as the Chairman of Tesla.
- Musk will be an independent Chairman for three years and will be considered ineligible to re-elected for the above mentioned time.
- Two new independent directors will join the board of directors at Tesla.
- A new committee of independent directors will be introduced in order to keep tabs on Musk’s communications.
- The $40 million penalty amount will be distributed to investors seeking justice under a court controlled procedure.