Elon Musk agrees to pay $20 million and quit as Tesla chairman in deal with SEC

2 months 1 week 4 days ago Saturday, September 29 2018 Sep 29, 2018 Saturday, September 29, 2018 6:36:00 PM CDT September 29, 2018 in News
Source: CNN Money
By: Jackie Wattles, CNN Money

(CNN Money) - Elon Musk agreed Saturday to step down as chairman of Tesla and pay a $20 million fine in a deal to settle charges brought this week by the Securities and Exchange Commission.

Under the settlement, which requires court approval, Musk will be allowed to stay as CEO but must leave his role as chairman of the board within 45 days. He cannot seek reelection for three years, according to court filings.

He accepted the deal with the SEC "without admitting or denying the allegations of the complaint," according to a court document.

Separately, Tesla agreed Saturday to pay $20 million to settle claims it failed to adequately police Musk's tweet.

"The $40 million in penalties will be distributed to harmed investors under a court-approved process," the SEC said in a press release.

The company also agreed to appoint two new independent directors to its board and establish a board committee to oversee Musk's communications.

Tesla declined to comment. A spokesperson confirmed Musk will be permitted to remain a member of the board.

The announcement from the SEC comes two days after the agency filed a lawsuit against Musk, claiming he misled investors. The suit centers on tweets Musk sent on August 7 in which he said he had secured funding to take Tesla private at $420 a share, causing the company's stock to soar. He had not secured the funding, the SEC said.

The lawsuit sought to ban Musk from serving as an officer or director of any publicly traded company.

Musk called the SEC's suit "unjustified."

"I have always taken action in the best interests of truth, transparency and investors," he said. "Integrity is the most important value in my life and the facts will show I never compromised this in any way."

CNBC, citing unnamed sources, reported that the agency filed the suit on Thursday after Musk refused an earlier settlement offer. Under that deal, Musk would have had to pay a "nominal fine" and leave his role as chairman for two years. He chose not to accept the terms because "because he felt that by settling he would not be truthful to himself," according to the outlet.

A representative for Musk did not immediately reply to CNN's request for comment Saturday.

Jay Dubow, a partner at Pepper Hamilton and a veteran of the SEC's enforcement division, said it was "unusual" that the SEC agreed to let Musk stay on as chief executive but exit the chairman role.

It's surprising considering "the conduct at issue, if [the SEC] really thought it was egregious," Dubow said. "The CEO is certainly more involved than the chairman in day-to-day operations."

He suggested the SEC may have determined that removing Musk as CEO would cause more harm to Tesla's share price, and thus harm investors.

Barclays analyst Brian Johnson estimated in a recent note that Tesla's stock has a $130 "Musk premium," which could disappear if he leaves.

Still unclear is whether or not the Department of Justice will file criminal charges against Musk.

Tesla confirmed earlier this month that the DOJ was investigating whether Musk's comments about taking his company private constituted criminal activity.

Dubow, the former SEC official, said he suspects nothing will come of it.

"My guess is that it's still possible the DOJ will pursue something, but...it's more likely than not that the DOJ chooses not to pursue this," he said.

The settlement has likely assuaged the SEC, mitigating the DOJ's incentive to act.

More News

Grid
List
COLUMBIA - Firefighters responded to a residential structure fire overnight. The blaze started around 11:49 p.m. Monday. The fire... More >>
2 hours ago Tuesday, December 11 2018 Dec 11, 2018 Tuesday, December 11, 2018 3:16:47 AM CST December 11, 2018 in News
COLUMBIA - Some students are starting to voice their opinions about possible redistricting of a new middle school. CPS... More >>
9 hours ago Monday, December 10 2018 Dec 10, 2018 Monday, December 10, 2018 8:30:00 PM CST December 10, 2018 in News
JEFFERSON CITY - More than 100 people gathered in Jefferson City Monday to learn more about the planned health care... More >>
9 hours ago Monday, December 10 2018 Dec 10, 2018 Monday, December 10, 2018 8:08:00 PM CST December 10, 2018 in News
COLUMBIA - Nobel Prize winner George P. Smith, a retired professor, says he lives a rather humble life beyond the... More >>
10 hours ago Monday, December 10 2018 Dec 10, 2018 Monday, December 10, 2018 7:13:00 PM CST December 10, 2018 in News
JEFFERSON CITY (AP) — Missouri's Republican Secretary of State Jay Ashcroft on Monday asked the Democratic auditor... More >>
13 hours ago Monday, December 10 2018 Dec 10, 2018 Monday, December 10, 2018 4:22:00 PM CST December 10, 2018 in News
COLUMBIA - The University of Missouri's Dr. George Smith was awarded the 2018 Nobel Prize in Chemistry Monday afternoon in... More >>
13 hours ago Monday, December 10 2018 Dec 10, 2018 Monday, December 10, 2018 3:50:00 PM CST December 10, 2018 in News
COLUMBIA - A Boone County circuit judge sentenced Miles Leighton Hillegas to seven years in prison Monday for an April... More >>
14 hours ago Monday, December 10 2018 Dec 10, 2018 Monday, December 10, 2018 3:15:00 PM CST December 10, 2018 in News
COLUMBIA - Christian Fellowship School is mourning the loss of student Bryce Hill, who was killed in a crash Saturday... More >>
14 hours ago Monday, December 10 2018 Dec 10, 2018 Monday, December 10, 2018 3:14:00 PM CST December 10, 2018 in News
COLUMBIA - MU assistant professor Pamela Brown said Dr. George P. Smith deserves the Nobel Prize in Chemistry for more... More >>
14 hours ago Monday, December 10 2018 Dec 10, 2018 Monday, December 10, 2018 3:06:00 PM CST December 10, 2018 in News
JEFFERSON CITY- Charges have been filed in the fatal shooting of 19-year old Nilez Nichols in Jefferson City. Prosecutors... More >>
15 hours ago Monday, December 10 2018 Dec 10, 2018 Monday, December 10, 2018 2:20:00 PM CST December 10, 2018 in News
COLUMBIA - The holiday period is a busy time for scams targeting shoppers, according to Michelle Gleba, Regional Director for... More >>
16 hours ago Monday, December 10 2018 Dec 10, 2018 Monday, December 10, 2018 1:04:00 PM CST December 10, 2018 in News
KANSAS CITY, Mo. (AP) — A massive tuba ensemble has smashed a Guinness World Record in Kansas City and spread... More >>
17 hours ago Monday, December 10 2018 Dec 10, 2018 Monday, December 10, 2018 12:07:00 PM CST December 10, 2018 in News
STOCKHOLM, SWEDEN- University of Missouri Professor Emeritus George Smith officially accepted his portion of the Nobel Prize in Chemistry Monday.... More >>
18 hours ago Monday, December 10 2018 Dec 10, 2018 Monday, December 10, 2018 11:18:00 AM CST December 10, 2018 in News
COLUMBIA — Police arrested Missouri defensive end Tre Williams early Sunday following a reported domestic incident. According to the... More >>
19 hours ago Monday, December 10 2018 Dec 10, 2018 Monday, December 10, 2018 10:39:00 AM CST December 10, 2018 in News
COLUMBIA - Those struggling to afford holiday gifts for their loved ones may still have options. Registration ends today for... More >>
1 day ago Monday, December 10 2018 Dec 10, 2018 Monday, December 10, 2018 3:27:53 AM CST December 10, 2018 in News
COLUMBIA - Columbia firefighters responded to a fire at Columbia Crossing Apartments on Towne Drive late Sunday night. Division... More >>
1 day ago Sunday, December 09 2018 Dec 9, 2018 Sunday, December 09, 2018 11:30:00 PM CST December 09, 2018 in News
(CNN) -- Treacherous driving conditions and canceled flights could keep residents stuck at home for days as a nasty mix... More >>
1 day ago Sunday, December 09 2018 Dec 9, 2018 Sunday, December 09, 2018 6:25:00 PM CST December 09, 2018 in News
OSAGE BEACH – A dog groomer in Osage Beach has made it a mission to train service dogs after she... More >>
1 day ago Sunday, December 09 2018 Dec 9, 2018 Sunday, December 09, 2018 2:08:00 PM CST December 09, 2018 in News
Columbia, MO
Broken Clouds 25°
6am 25°
7am 27°
8am 30°
9am 33°