Last week news broke that the US Securities and Exchange Commission (SEC) was suing Elon Musk and Tesla for a series of misleading tweets that the founder made regarding taking the company private.
Now the SEC is reporting that the pair have reached a settlement, with Musk being told that he has 45 days to step down as chairman of the company. He will, however, remain CEO of Tesla Motors, with the SEC adding that he cannot take up the chairman role for the next three years.
“The Securities and Exchange Commission announced today 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,” explained a press release on the matter.
Added to this is a $20 million fine that Tesla Motors will have to pay, as Musk’s tweets resulted in the share price for the electric carmaker to rise substantially.
Furthermore the SEC took issue with the fact that Musk noted that he had secured funding for the private venture from Saudi investors, which turns out to not have been the case.
“According to the SEC’s complaint against him, Musk tweeted on August 7, 2018 that he could take Tesla private at $420 per share — a substantial premium to its trading price at the time — that funding for the transaction had been secured, and that the only remaining uncertainty was a shareholder vote. The SEC’s complaint alleged that, in truth, Musk knew that the potential transaction was uncertain and subject to numerous contingencies,” the press release adds.
The Verge also reports that a condition in the agreement will bar Musk from publicly stating whether he did or did not do what the SEC has implicated him in.
It’s unclear precisely why Musk has chosen to settle, but it may have something to do with the fact that Tesla shares took a sharp dip late last week. As of markets closing on 28th September 2018, Tesla stock price fell by a reported 14 percent, equivalent to $7 billion.
Musk may also have been keen on the settlement as it only meant that he stepped down as chairman, and will would still be an integral role of the day-to-day running of the business as CEO.
Whether or not he stays in the role remains to be seen though, as the Tesla board and shareholders cannot be too keen on the recent developments.
Needless to say, we’re expecting Elon Musk to be far less vocal on Twitter when it comes to his business ventures in future.