Elon Musk To Step Down As Tesla Chairman
After a fairly eventful month for Musk, he has now signed a deal with the SEC that will require him to step down as Chairman of Tesla for three years. He will remain CEO, but the deal also includes a $20 million fine to settle the securities fraud charges. The Securities and Exchange Commission had recently sued Musk in federal court over a tweet that they say misled investors, specifically regarding a Tesla buyout. He claimed that he had “funding secured” at $420 a share, and now the company is also being held responsible for not properly vetting what Musk posts on Twitter.
Some are saying this might be the most expensive tweet in the history of the popular social media site. The post, which Musk wrote on August 7, 2018, claimed that he would be taking the company private. This had a huge impact on the stock market, so much so that the SEC noticed. After an investigation, they determined that the tweet was unfounded and hurt investors. Musk has 45 days to step down and he will be replaced by an independent chairman who will be appointed by the board.
On top of this, Tesla will have to pay a $20 million fine, in addition to Musk’s identical fine, but has not been charged with any fraud. The $40 million will be given to the investors, through a court-approved process, who were hurt by the tweet. The board will also be required to add two new independent directors, as well as establish a new committee of independent directors. While Musk will have the opportunity to run for chairman again in 2021, the SEC could still extend the ban. They also investigated Twitter itself, and want to make the site can’t continue to enable this kind of activity.