SEC Give Elon Musk A $20m Slap On The Wrist Over Funding Secured Tweet
The US Securities and Exchange Commission (SEC) a federal body that regulates the stock exchange and organizations within, has handed Elon Musk a $20m fine in addition to forcing him to relinquish the chairmanship of Tesla. Musk retains his rank as CEO. The settlement between Musk and the SEC stipulates that Musk has to step down from his role as chairman of the board within 45 days. He will be barred from seeking re-election for three years.
So how did Musk end up falling foul of the SEC? It’s all to do with the “funding secured” tweet he sent in August. Musk threw out the idea, or at least insinuated, that Tesla (a publically listed company) could go private.
As a result of that tweet, Tesla’s share price rose by 9 percent. This is kind of like insider trading, in America, it’s considered criminal activity.
However, Musk casually declared his intention to the world via Twitter. Which is kind of like committing a crime in full view of the world and getting away with it.
Leaked information indicates that the SEC initially offered Musk a less harsh penalty A two year ban on the chairman of the board role and a nominal fine. Musk refused.
So The SEC upped the pressure. Eventually, Musk and the SEC arrived at the current settlement which still amounts to a slap on the wrist.
It is unclear whether Tesla will install a new chairman, Musk can simply make the role redundant or fill it with someone who technically ranks lower than him. A Kind of puppet chairman.
The SEC is said to have stalled on a decision to remove Musk as CEO, citing that it could actually cause Tesla share prices to fall. And therefore cause more harm to investors.
Musk told staff over the weekend to “ignore all distractions”. The company is said to be close to turning a profit.