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Musk Will Not Be Tesla Chairman Under Settlement Agreement With SEC


09/30/2018


Musk Will Not Be Tesla Chairman Under Settlement Agreement With SEC
In a settlement with the United States Security and Exchange Commission (SEC), Tesla chairman and founder Elon Musk and the company Tesla has agreed to pay $20 million each and the stepping down of Musk as the chairman of the electric car manufacturer.
 
The settlement marks an end to two months of continuous turmoil for Musk following his tweet in early August of his intention to taking Tesla private and announcement of having secured funds for the same. Musk would however remain the chief executive of the company according to the settlement deal.  
 
This was announced by the SEC on Sunday and is a potential relief to Tesla investors who were worried about the future of Musk at Tesla and that of the company itself without Musk at its helm. There were also concerns that a long drawn legal battle would impact the loss making electric car maker further.
 
The charges that were brought against Musk amounted to fraud and of misleading investors by tweeting that he had secured finance for taking Tesla private when in fact he had no such in\\assurance or agreement. The SEC also picked on the tweet of Musk where he fixed a price of $420 per share for Tesla while taking it private and SEC claimed that the basis of the price was not on calculations but resembled slang for cannabis.
 
Tesla could be strengthened further by the settlement, believes many investors and corporate governance experts. The company has had to suffer with the often irate behaviour of Musk including pictures of him smoking weed and criticising a British rescue diver on Twitter.
 
According to Steven Heim, a director at Boston Common Asset Management, which owns shares in Tesla battery maker Panasonic Corp, Tesla would be strengthen because going forward, there would be greater oversight on Musk by the company even though he would not be forced to exit the company.
 
Under the proposed agreement, in order to exert some control over Musk’s communications, an independent chairman, two independent directors, and a board committee needs to be appointed by Tesla.
 
“The prompt resolution of this matter on the agreed terms is in the best interests of our markets and our investors, including the shareholders of Tesla,” SEC Chairman Jay Clayton said in a statement.
 
The SEC retracted from its demand of banning Musk to run Tesla completely which was a welcome news for investors.
 
“I think this is the best possible outcome for everyone involved” said Ivan Feinseth of Tigress Financial Partners, who rates Tesla “neutral” and who called the SEC’s penalty “a slap on the wrist” for Musk.
 
“The fact that he can remain CEO is very important for the company.”
 
There were no immediate comments about whether the settlement agreement would have to be approved by a court.
 
(Source:www.techcrunch.com)