Tesla founder Elon Musk has agreed to pay a fine of $US 20 million and step down as the chair of the company’s board, after reaching a settlement with the US Securities and Exchange Commission over the weekend, all thanks to a careless Tweet he made back in August.
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The company itself will also pay $20 million as part of the settlement deal, and has agreed to install two new, independent directors on the board. Tesla has also promised to monitor the eccentric founder’s public comments more closely from now on.
Musk sent a shock through financial markets in August of this year, when he impulsively Tweeted that he had secured funding to take the company private at $420 a share, a claim that the SEC labelled “false and misleading”.
He later said that he arrived at the $420 figure because it was roughly 20 percent on the premium of the Telsa share price at the time, and because he wanted to impress his girlfriend Grimes with a weed joke, which … probably didn’t help very much.
Per reports in the Washington Post, the SEC offered to settle with the 47-year-old on Thursday of last week, but he initially rejected their terms, leading them to file suit that same day. In the suit, the regulator alleged that:
“Musk made his false and misleading public statements about taking Tesla private using his mobile phone in the middle of the active trading day. He did not discuss the content of the statements with anyone else prior to publishing them to his over 22 million Twitter followers and anyone else with access to the internet.”
It is understood that the terms to which he agreed over the weekend were similar to the ones he rejected last week.
Elon Musk will retain his position as CEO of Tesla, but will have to resign from the board within 45 days, and will be barred from holding a position there for three years. He does not, however, have to make any admission of wrongdoing.
The co-director of the SEC’s enforcement division made a statement to the media after the announcement, saying:
“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 to protect investors.”
