Elon Musk steps down as Tesla chairman in SEC fraud settlement
Elon Musk is stepping down from his role as Tesla chairman as part of a settlement with the Securities and Exchange Commission (SEC). He still retains his role as Tesla CEO, and has a place on the board, but he will no longer be leading the company’s board for the next three years.
Alongside Musk’s change of interaction with Tesla, both he and the company need to pay a $20 million fine for the foible. The money will be distributed to investors harmed by Musk’s tweet and the wild market swings that happened during the whole debacle.
Following the lawsuit, Tesla will also have to add two independent members to its board. The company will also have to keep an eye on Musk’s conversations and communications with investors. This means that, even as CEO, he’ll have to have someone else approve his statements before he makes them – including those on Twitter.
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Things could have actually been a lot worse for Tesla and Musk, with experts highlighting the fact that he’s retained his CEO position, is still the dominant stockholder and still has a place on the board. In reality, by no longer being the chairperson Musk can’t call board meetings nor can he set their agendas.
In fact, the biggest impact will be the new chairperson of Tesla. As the SEC states that they have to be independent, it’ll mean Musk no longer has control over the company he founded – a rather symbolic unthroning. It could also mean that the new chairperson’s aims and vision aren’t quite as grand or as long-term as Musk’s may have been.
Now the SEC problem is out of the way, Tesla and Musk still have to face off against two more legal obstacles. Following Musk’s Twitter antics, Telsa and Musk are under investigation for possible criminal fraud due to Musk’s “funding secured” tweet. The second is a series of class-action lawsuits filed by investors who say they lost money due to the market volatility after Musk’s statements. It’s expected they’ll want $40 million in fines to then dish out to investors, but it’s believed that they could push for more.