Tesla CEO Elon Musk will step down as chairman of the electric automaker. He and Tesla will pay $20 million fines. Musk will resign from his role of chairman within 45 days of the agreement. Elon tweeted “considering taking Tesla private at $420. Funding secured.” But he did not provide financing details. Securities and Exchange Commission determined that he never finalized any deal with Saudi sovereign wealth fund. So he was charged for making false and misleading statements.
Stephanie Avakian, co-director of the S.E.C.’s enforcement division said –
“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.”
The SEC said in a statement –
“The SEC also charged Tesla with failing to have required disclosure controls and procedures relating to Musk’s tweets, a charge that Tesla has agreed to settle.
The settlements, which are subject to court approval, will result in comprehensive corporate governance and other reforms at Tesla – including Musk’s removal as chairman of the Tesla board – and the payment by Musk and Tesla of financial penalties.
The SEC said in the complaint that Musk violated anti-fraud provisions of the federal securities laws. Therefore, the commission has asked the court to fine Musk and bar the billionaire entrepreneur from serving as an officer or director of the public company.
Musk described fraud charges an “unjustified action” that has left him disappointed. Tesla and the board issued a joint statement supporting Musk. Check out the document here.
The settlement clears a big headache for Tesla, but other problems remain. The SEC is continuing to look into the company’s past claims about its production goals. Now that Mr. Musk has agreed to step down as chairman, Tesla’s board must decide who should replace him.