Tesla and Elon Musk both have agreed to pay $20 million to financial regulators each and the billionaire will step down from the chair of Tesla for three years after reaching a deal with the US financial regulator over tweets he made about taking the firm into private ownership.
Under the settlement, Musk would remain as chief executive but must leave his other post within 45 days.
According to investors and corporate governance experts, the agreement could really strengthen Tesla, which has been bruised by Musk’s recent behavior, which included smoking marijuana and wielding a sword on a webcast, and attacking a British rescue diver via Twitter.
In the past two months, the share prices of the electric car company collapsed a lot. Last Friday Tesla’s share price was down close to 14% as investors lost confidence.
The Securities and Exchange Commission (SEC) filed a suit in New York accusing Musk of fraud last week, alleging that the tweets about the electric car company Tesla got funds to private, which had no basis in fact, and said the market chaos that ensued hurt investors.
In his tweet in August, he said he was considering taking Tesla off the stock market and into private ownership.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Initially, the regulators demanded to terminate Musk from running Tesla, a sanction that many investors said would be disastrous for the loss-making electric carmaker. But, it didn’t go that far.
The SEC charged Tesla with failing to have required disclosure controls and procedures for Musk’s tweets. The SEC said the company had no way to determine if his tweets contained complete and accurate information.
Under the terms of the deal, Musk would also have to comply with the company’s communications procedures when tweeting about the firm.
Neither Musk nor Tesla admitted or denied the SEC’s findings as part of the settlement.
HrNxt.com Newsdesk has researchers and writers with an excellent domain knowledge about the talent ecosystem, and the business environment. The team keeps a tab on the latest happenings in the ecosystem to bring most relevant news and insights for our readers. You can connect with our newsdesk at newsdesk@hrnxt.com.