Big changes are afoot at Tesla as Elon Musk is out as chairman after a settlement with the Securities and Exchange Commission. The last month has been difficult for the company after Musk tweeted out a message which caused volatility in the company’s stock prices.
TMZ says that according to his agreement with the SEC, Elon Musk can remain as CEO at Tesla, but he has 45 days to step down as chairman of the company. Trouble for Musk started when the SEC filed a lawsuit against the company head for leading investors astray with a tweet he claimed afterward was a joke.
“Am considering taking Tesla private at $420. Funding secured.”
Musk also made a questionable appearance on a podcast where he talked about and smoked marijuana.
The SEC says that the company’s founder’s tweets “caused significant confusion and disruption in the market for Tesla’s stock” affecting the sales price. Elon Musk and Tesla will also have to pay a fine of $20 million, and cannot be reinstated as the chairman at Tesla for three years. Additionally, Tesla must also appoint two new “independent directors” to the board.
This settlement between Elon Musk and the SEC is still subject to court approval.
— CNN International (@cnni) September 29, 2018
The New York Times says that Stephanie Avakian of the SEC gave a statement about Elon Musk’s punishment by the ruling board.
“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.”
Two sources close to the negotiations say that this agreement is harsher than the agreement that Elon Musk rejected on Thursday. The terms at that point would have only kept Musk from being chairman for two years, and the company would have paid a penalty of $10 million.
The Verge said that in the complaint, the SEC claimed that Musk was intentionally trying to mislead the public.
“Musk knew that he had never discussed a going-private transaction at $420 per share with any potential funding source, had done nothing to investigate whether it would be possible for all current investors to remain with Tesla as a private company via a ‘special purpose fund,’ and had not confirmed support of Tesla’s investors for a potential going- private transaction.”
Elon Musk and Tesla are still being sued in a related matter by a group of Tesla shareholders for losses from alleged market manipulation.