Tesla’s Elon Musk settles with SEC, is out as board chair, will pay $20M

Elon Musk


Tesla

Tesla CEO Elon Musk will pay a $20 million fine and step down as chairman of the company’s board under a settlement with the US Securities and Exchange Commission over alleged securities fraud, the SEC said on Saturday.

Under the settlement, Musk will remain CEO of Tesla, according to various media reports. A separate, related settlement, also announced Saturday, calls for Tesla to pay another $20 million. In addition, according to an SEC release, the settlements include the following stipulations:

–Musk will be replaced as board chairman by an independent chairman and will be ineligible to be re-elected to that position for three years.
–Tesla will appoint a total of two new independent directors to its board;
–Tesla will establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk’s communications.
–The total of $40 million in penalties will be distributed to harmed investors under a court-approved process.

The SEC had filed a lawsuit against Musk on Thursday, regarding an Aug. 7 tweet in which he told his 22 million followers that he was poised to take the company private.

“Musk’s false and misleading public statements and omissions caused significant confusion and disruption in the market for Tesla’s stock and resulting harm to investors,” the SEC said in the complaint.

Musk and Tesla have now settled the SEC’s charges without admitting or denying the agency’s allegations.

“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, said in the agency’s release.

Tesla didn’t immediately respond to a request for comment.

More to come

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