(HedgeCo.Net) The Securities and Exchange Commission has announced that Elon Musk, CEO and Chairman of Silicon Valley-based Tesla, Inc., has agreed to settle the securities fraud charge brought by the SEC against him last week. The SEC also today charged Tesla with failing to have required disclosure controls and procedures relating to Musk\u2019s tweets, a charge that Tesla has agreed to settle. The settlements, which are subject to court approval, will result in comprehensive corporate governance and other reforms at Tesla\u2014including Musk\u2019s removal as Chairman of the Tesla board\u2014and the payment by Musk and Tesla of financial penalties.<\/p>\n
According to the SEC\u2019s complaint against him, Musk tweeted on August 7, 2018 that he could take Tesla private at $420 per share \u2014 a substantial premium to its trading price at the time \u2014 that funding for the transaction had been secured, and that the only remaining uncertainty was a shareholder vote. The SEC\u2019s complaint alleged that, in truth, Musk knew that the potential transaction was uncertain and subject to numerous contingencies. Musk had not discussed specific deal terms, including price, with any potential financing partners, and his statements about the possible transaction lacked an adequate basis in fact. According to the SEC\u2019s complaint, Musk\u2019s misleading tweets caused Tesla\u2019s stock price to jump by over six percent on August 7, and led to significant market disruption.<\/p>\n
According to the SEC\u2019s complaint against Tesla, despite notifying the market in 2013 that it intended to use Musk\u2019s Twitter account as a means of announcing material information about Tesla and encouraging investors to review Musk\u2019s tweets, Tesla had no disclosure controls or procedures in place to determine whether Musk\u2019s tweets contained information required to be disclosed in Tesla\u2019s SEC filings. Nor did it have sufficient processes in place to that Musk\u2019s tweets were accurate or complete.<\/p>\n
Musk and Tesla have agreed to settle the charges against them without admitting or denying the SEC\u2019s allegations. Among other relief, the settlements require that:<\/p>\n
Musk will step down as Tesla\u2019s Chairman and be replaced by an independent Chairman. Musk will be ineligible to be re-elected Chairman for three years;
\n Tesla will appoint a total of two new independent directors to its board;
\n Tesla will establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk\u2019s communications;
\n Musk and Tesla will each pay a separate $20 million penalty. The $40 million in penalties will be distributed to harmed investors under a court-approved process. <\/p>\n
\u201cThe total package of remedies and relief announced today are specifically designed to address the misconduct at issue by strengthening Tesla\u2019s corporate governance and oversight in order to protect investors,\u201d said Stephanie Avakian, Co-Director of the SEC\u2019s Enforcement Division. <\/p>\n
\u201cAs a result of the settlement, Elon Musk will no longer be Chairman of Tesla, Tesla\u2019s board will adopt important reforms \u2014including an obligation to oversee Musk\u2019s communications with investors\u2014and both will pay financial penalties,\u201d added Steven Peikin, Co-Director of the SEC\u2019s Enforcement Division. \u201cThe resolution is intended to prevent further market disruption and harm to Tesla\u2019s shareholders.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
(HedgeCo.Net) The Securities and Exchange Commission has announced that Elon Musk, CEO and Chairman of Silicon Valley-based Tesla, Inc., has agreed to settle the securities fraud charge brought by the SEC against him last week. The SEC also today charged […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,3,16048,16047,4],"tags":[],"class_list":["post-65967","post","type-post","status-publish","format-standard","hentry","category-hedgeco-networks-press-releases","category-hedgeco-news","category-hedgecovest-news","category-insider-trading-2","category-syndicated"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/65967","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=65967"}],"version-history":[{"count":6,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/65967\/revisions"}],"predecessor-version":[{"id":65973,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/65967\/revisions\/65973"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=65967"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=65967"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=65967"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}