Tesla Inc and Elon Musk have agreed to pay $20 Mn each to financial regulators and Musk will step down as the company’s chairman but remain as chief executive, under a settlement that caps a tumultuous two months for the carmaker.
Under the settlement, Elon Musk cannot be re-elected to the chairman’s post for three years, but will remain CEO. Tesla will appoint an independent chairman, two independent directors, and a board committee to control Musk’s communications
The SEC last week had charged Musk with misleading investors with tweets on 7th August that said he was considering taking Tesla private at $420 a share and had secured funding. The tweets had no basis in fact, and the ensuring market chaos hurt investors, it claimed.
As per SEC, Musk’s statements violate the 1934 Securities Exchange Act, and that Musk “knew or was reckless in not knowing” that his tweets were not accurate and true.
The billionaire entrepreneur is now required to step down as chairman of Tesla within 45 days, and he is not permitted to be re-elected to the post for three years.
SEC Chairman Jay Clayton said in a statement, “The prompt resolution of this matter on the agreed terms is in the best interests of our markets and our investors, including the shareholders of Tesla.”