Elon Musk Settles SEC Lawsuit, Forced Out As Tesla’s Chairman But Stays As CEO, $20 Million Fine And More
Elon Musk and the SEC have agreed on a settlement over the lawsuit that the latter filed against Tesla’s CEO over comments he made about his attempt to take the company private.
Musk will be able to remain as CEO, but he will have to resign from his role as Chairman of the board, pay a $20 million fine, and more.
As we reported on Thursday, the SEC filed a lawsuit against Elon Musk over his infamous “funding secured” comment regarding his failed attempt to take Tesla private.
They were accusing Musk of making “a series of false and misleading statements.” The agency sought to have him removed from his role as CEO and Chairman at Tesla.
But they have now reached a settlement according to a new agreement document filed today (see in full below).
According to document, Musk doesn’t admit any guilt over the comments, but he has to resign from his role of chairman of the board within 45 days.
It’s a role that he has been holding for almost 15 years. He would be able to seek election again in 3 years.
Furthermore, Musk has to pay a personal $20 million fine.
The settlement also appears to include more oversight regarding Musk’s communications about Tesla. They wrote in the document:
“Defendant undertakes to comply with all mandatory procedures implemented by Tesla, Inc. (the “Company”) regarding (i) the oversight of communications relating to the Company made in any format, including, but not limited to, posts on social media (e.g., Twitter), the Company’s website (e.g., the Company’s blog), press releases, and investor calls, and (ii) the pre-approval of any such written communications that contain, or reasonably could contain, information material to the Company or its shareholders;”
Update: the SEC has issued a statement in which they highlight additional penalties including the appointment of 2 new independent directors and a separate $20 million fine for Tesla:
- Musk will step down as Tesla’s Chairman and be replaced by an independent Chairman. Musk will be ineligible to be re-elected Chairman 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;
- Musk and Tesla will each pay a separate $20 million penalty. The $40 million in penalties will be distributed to harmed investors under a court-approved process.
The story is still developing – refresh the page to stay updated.
Here’s the full settlement agreement.
Author: Fred Lambert