Elon Musk fined $20 million and steps down as Tesla chairman
Elon Musk and Tesla have reached a settlement with the SEC over the speculative privatization of the electric car company. Musk will remain as Tesla CEO
Elon Musk is something of a real-life Tony Stark — minus the flying suit. His technological visions are fuelled by his vast wealth and bypassing of red tape that often hinders other companies in the same sphere. However, Mr Musk’s actions of late have landed him in hot water in many respects, and his speculative tweets relating to Tesla have now resulted in a $20 million fine.
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Back in August, Musk tweeted suggesting that he could take Tesla private for around $420 a share and that there was the funding to do so. This resulted in Tesla’s share prices skyrocketing as short-term investors looked to cash-in on Musk buying out their shares in the company. In reality no such funding was secured for this bold claim, and now the Securities and Exchange Commission (SEC) has concluded that it led to significant market disruption.
Mr Musk initially ruled against the SEC’s conclusion, but has now reached an agreement with the regulatory body that will see him pay a $20 million fine and step down as Tesla’s chairman. Musk will remain CEO of the electric vehicle company, but Tesla itself must also shoulder a $20 million fine of its own as penance. Tesla will also appoint a pair of independent directors and also take more control over Elon Musk’s public communications to avoid such a scenario in the future.
Musk’s upstanding role of CEO means that he’ll still be in charge of running the company, but will have less autonomy and need to get significant business decisions signed-off by company directors.
The $40 million in total fines are to be distributed to those shareholders who may have been harmed by the offending tweet. Stephanie Avakian, the co-director of the SEC’s enforcement division, said: 'The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders.'
While Elon Musk is clearly a force for good in the world of electric vehicles, these changes should add more stability to Tesla moving forward.
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