“Securities and Exchange Commission officials were understandably taken aback on Thursday morning when Tesla’s board — and its chairman, Elon Musk — abruptly pulled out of a carefully crafted settlement,” James B. Stewart reports for The New York Times. “After the S.E.C. responded by accusing Mr. Musk, but not the company that he had co-founded, of securities fraud, the board further defied regulators, issuing a provocative statement saying that the directors were ‘fully confident in Elon, his integrity, and his leadership of the company.'”
“It was a stunning reversal: The board had rejected a settlement that was extraordinarily generous — it would have allowed Mr. Musk to remain as chief executive, and required him to step down as chairman for only two years. Now, the company was at risk of losing Mr. Musk as chairman and chief executive if regulators prevailed in court,” Stewart reports. “But Mr. Musk had given the board little choice: In a phone call with directors before their lawyers went back to federal regulators with a final decision, Mr. Musk threatened to resign on the spot if the board insisted that he and the company enter into the settlement. Not only that, he demanded the board publicly extol his integrity. On Saturday, the company and Mr. Musk finally agreed to settle the matter, ending a crisis that began with Mr. Musk’s now-infamous Twitter post saying that he had “funding secured” for a buyout at $420 a share.”
“Mr. Musk’s 48 hours of obstinance came at a significant price to him and the company. They had passed on Thursday’s generous offer, and the S.E.C. felt compelled to extract greater concessions. The ban on Mr. Musk’s serving as chairman went from two years to three, and his fine doubled to $20 million. Tesla will also pay a $20 million fine, and Mr. Musk agreed to personally buy the same amount in Tesla stock. The S.E.C. is also requiring the company to add two independent directors and to elect an independent director as chairman,” Stewart reports. “‘Rejecting such a favorable settlement is proof that he needs monitoring,’ said John C. Coffee Jr., a professor at Columbia Law School.”
Read more in the full article here.
MacDailyNews Take: Geez, the S.E.C.’s initial settlement offer was even more favorable to Tesla and all Musk seems to have extracted by rejecting it is not having to admit “wrongdoing.” For that, he got an extra year of being barred from chairmanship, another $10 million each added to his and Tesla’s fines, the addition of two independent directors, with an independent director as chairman.
Tough negotiator that Musk.
So, how soon ’til Elon threatens to lop off an ear? Or just does it for shits and giggles?
$40 million and loss of Chairmanship is an admission of wrongdoing, regardless of the legalese bullshit.
In other words: If Musk did nothing wrong, he’d still be Chairman, he and Tesla wouldn’t each be $20 million lighter in the wallet (not that they’ll notice), and the company wouldn’t be appointing two new independent directors and establishing a committee of independent board members.
Tweets can be mighty expensive. — MacDailyNews, September 29, 2018
Musk ousted as Tesla chairman, fined $40 million in SEC settlement over fraud charges; will remain CEO – September 29, 2018
U.S. SEC charges Tesla CEO Elon Musk with fraud – September 27, 2018
Tesla shares crash after Elon Musk smokes pot on live web show, exhibits other bizarre behavior – September 8, 2016
Apple hired scores of ex-Tesla employees this year, and not just for its car project – August 24, 2018
Tesla sinks on concerns over CEO Elon Musk’s erratic behavior – August 17, 2018
Doug Field, former Tesla engineering chief, returns to Apple – August 10, 2018
Buh..bu…but it’s pipeline timmy‘s fault!!!! p-p-pipeline..pftsp..sputter..t-t-t-timmy! fuhh pft*#!!!
Just another example of due process being cast aside in favor of authoritarian dictates. The SEC has spoken. Submit, thou subject of the imperium.
Musk manipulates his companies stock, breaks the rules to make more money, gets offered a slap on the wrist, throws a hussy-fit, gets slapped harder when he finally goes back to the table, and somehow this is ‘Authoritarian Dictate’ from the SEC?
Really have an issue with the Right vs Wrong concept?
Thank you for the reality check, I thought I had entered the twilight zone for a minute there, a sureal place where Darth Vader had somehow evolved into the Dalai Lama overnight. Some people have a scary view of right and wrong it seems.
It’s all John Jangler’s fault. If he wasn’t an artiste, then none of this would ever have happened to Musk.
I see he’s been hitting that blunt again…
Musk apparently has completely lost it. He had a very generous deal. He should have taken it and thanked the SEC.
Looks like Apple should wait a bit until the dust settles to purchase Tesla. It could be a bargain pretty soon.
Envy much? Even MDNs take is beyond juvenile. Why are people wishing ill on an American Silicon Valley company run by a world changing genius. He is already more impactful than Jobs. Funny thing that MDN didn’t bother to link to the articles this past week speculating how Al Gore could become one of Tesla’s new board members and chief executive. This, and many comments in this forum, reek of desperation.
Drive one for any period of time and I guarantee you won’t be pissing and moaning about the company in a forum again unless you are a paid shrill.
We can hope, I’d love to see Musk go.
“Mr. Musk threatened to resign on the spot if the board insisted that he and the company enter into the settlement. Not only that, he demanded the board publicly extol his integrity”
I guess the Board wasn’t all that independent since they caved to Elon’s demands. Maybe the SEC had the right idea to remove Elon from the Board and to add two new independent Board members.
From the beginning, he has had the aura of a snake oil salesman, so yeah, Apple ought to buy Tesla after Elon gets through draining it of whatever value it actually had. Undetermined, time will tell, but not one dime of investment from me.
lets see; Malcom Bricklin, John DeLorean, never forget the day. I lived across the street from the National Service Manager for DeLorean. He left home one morning driving his DeLorean, and drove home later in the day in a 1963 Volvo 544 after they announced the shutdown. I went to the Delorean HQ for the liquidation auction a few months later. There was an office desk there. I didnt buy it.
Elon is a genius, but that doesn’t mean Tesla will succeed as a business, and certainly most likely not worth the valuation the cult has given it.
The CEO of Ford had already foreseen business problems at Tesla. The other car companies are just waiting to buy TESLA.
Ford has bigger issues than Tesla. Ford was outsold by FCA this year, and with apparently bare technology cupboards, Ford is doubling down on oversized US market vehicles while the rest of the world diversifies and advances new stuff. Makes one wonder what company will buy Ford when the next petroleum war craters the market for gas guzzlers.
Am i the only one who just sees this as more federal overreach? Really, this is just highway robbery. And the Musk hatred here doesn’t make any sense. But sometimes fanboys get bent out of shape when they see someone too much like Jobs. And before you decide i am going too far, i will remind you that he IS part of su.org, and one of the few people using his money to move the marker closer to the knee of the exponential technological burst. Give the guy a break, why don’t you…and stop being so DAMN jealous.
Seriously? Who’s being as irrational as Elon? Are you going to put a clip on Youtube defending Elon, like that guy did for Britney? Stop being so mean to Elon, waaaah…
And before you just label me as a hater, I have a Model 3 on order. I love the cars, but I don’t have to love its leader’s actions.