Late night tweets can have consequences. This is proof.
Tesla CEO and chairman Elon Musk will soon be stripped of his chairman status. Why? Because he wrote something on Twitter last August about taking Tesla private which the SEC says harmed investors. According to Bloomberg, a US judge has approved a settlement between Tesla and Musk and the Securities and Exchange Commission to the tune of $40 million. Musk will personally pay $20 million while Tesla has to fork over the other half. The SEC also demanded that Musk resign as Tesla’s chairman within 45 days. Rumors regarding his successor are still ongoing. Musk will still remain CEO but in the very near future, he’ll have to answer to someone else.
Maybe the final settlement is for the best, even for Tesla. For starters, the California-based automaker can now focus once again on production in order to meet high demand, particularly for the Model 3. The judge’s approval also enabled Tesla’s stock to rise. But perhaps the best part of the deal, at least for Musk and Tesla, is that neither will have to admit or deny any wrongdoing.
The combined $40 million will be distributed to harmed shareholders. But don’t think for a moment Musk isn’t walking away from this episode without a grudge. Only a few days after the settlement’s announcement (but prior to its final approval) Musk used Twitter (has he learned nothing?) to sarcastically refer to the SEC as the “Shortseller Enrichment Commission.” Further sarcasm was thrown at the SEC for the unusual speed of its investigation against Musk and Tesla.
For now, things appear to be back to normal and everyone, Musk, Tesla, shareholders, and the SEC, can continue doing what it is they do. Then again, this is Elon Musk we’re talking about here. The guy has never been known for playing by the rules. His personality and smarts have taken him very far in life, but it could also be his undoing if he chooses to challenge a powerful and government-backed financial system again.