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Elon Musk obliged to step down as Tesla board chair in SEC settlement

Musk has had to strike a deal with the SEC. (Source: thedrive.com)
Musk has had to strike a deal with the SEC. (Source: thedrive.com)
Elon Musk has lost his position as the chair of Tesla's board as a result of needing to make a deal with the United States' Securities and Exchange Commission (SEC). The e-vehicle manufacturer will also have to pay the SEC US$20 million as part of this agreement. The commission has taken this action over Musk's threats to make his company private.

Nearly two months ago now, Elon Musk sent a Tweet suggesting that he was planning to take his electric vehicle company, Tesla, private. He also claimed that the shares linked to this sale would be worth US$420 each. However, the capital for this never emerged; in addition, Musk's Twitter activity attracted the attention of the Securities and Exchange Commission (SEC).

This body proceeded to sue Musk, claiming that he had misled investors with his social media announcements. This suit could have ended in a settlement that would have required Musk to step down as chair of Tesla's board and pay a nomlnal fee. However, Musk rejected this deal, claiming that it would mean he was "not being truthful to himself".

However, we now know that Musk has agreed to a subsequent deal. This one means that he is indeed not the head of the company's board any more. In addition, Musk cannot now seek re-election to this post for 3 years. The deal also requires Tesla to pay a US$20 million fine, as they failed to control their chair's Twitter antics. On the other hand, Musk is retaining his position as Tesla's chief executive officer (CEO).

This may seem very hard on Tesla. Then again, an analyst from Barclays has speculated that this settlement may alleviate the risks of the US Department of Justice pursuing criminal charges against it.

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> Notebook / Laptop Reviews and News > News > News Archive > Newsarchive 2018 09 > Elon Musk obliged to step down as Tesla board chair in SEC settlement
Deirdre O Donnell, 2018-09-30 (Update: 2018-09-30)