Tag Archives: Elon Musk

Elon Musk Ousted As Tesla Chairperson

Elon Musk no longer Tesla chairman
Source: The Verge

On Saturday, 29 September 2018, Elon Musk and the Securities and Exchange Commission (SEC) reached a settlement on charges that had been filed against him two days earlier. The terms say that he must step down as Tesla chairman within 45 days and may not assume that role again for three years, but that he is allowed to remain the company’s Chief Executive Officer during that time.

Alongside the settlement with the entrepreneur, the SEC has also charged Tesla for failing to control their chairman on Twitter. All of this comes after a Tweet Musk posted on the 7 August 2018, which said he was considering converting the automaker from a publicly traded company to a private one. He stated that funding had been secured, and rounded the share price up from a calculated $419 to $420 – reportedly because of the significance of that number to pro-marijuana culture.

Share prices soared by 11%, but the SEC put a spanner in the works by asking for explanations the next day. Usually, such a move goes through considerable due process – extensive internal preparations, and announcements through official channels.

The scrutinising by the SEC, and the fact that the 47-year-old ultimately admitted that funds were not secured led to a plummet in stock value. The funding that he was referring to was from the Saudi Arabian government, but while he had been in talks with them no formal agreement had been reached.

Terms of the Agreement

Musk and Tesla will each have to pay fines of US$20 million, although securities purchasers are said to have lost hundreds of millions of dollars. These funds will be distributed to investors that have been harmed, under a court-approved process. In addition, the electric car manufacturer will have to make two new appointments to its board of directors, and hire a lawyer to monitor all Musk’s communications, Tweets included.

This is the second deal that has been negotiated; in the first the chairman ban was two years and the fine was US$10 million. However, at the last minute Musk decided not to go through with it. The SEC hit back with new securities fraud charges and the stiffer penalties. The demoted chair is also not permitted to admit or deny that he is guilty of the securities fraud charges – so he can’t state publicly that he didn’t do anything wrong.

Many people think that the PayPal founder got off quite lightly, and that Tesla will survive this storm. The company has finally succeeded in making enough Model 3s to turn profit, and has started to offer other versions of the car. This is a sure sign of their confidence in manufacturing. And of course, the entrepreneur is still very, very wealthy. Even after settling with the SEC, he has the kind of money that most people only see if they win really big in Roulette!

Erratic Behaviour

Musk has been guilty of bizarre late-night Tweets for some time, and he also smoked marijuana in an interview with Joe Rogan. In addition, he labelled one of the divers who helped to rescue boys trapped in a cave in Thailand as a paedophile – although he did apologise later. Rumours attribute some of this behaviour to the use of Ambien that he takes to help him sleep, and the use of recreational drugs.

But it appears, despite everything, that the SEC recognises the pulling power that the Musk name retains. The fact that he has been able to remain Chief Executive Officer reflects this. Shareholders still feel that his visionary energy is needed to carry Tesla forward, and the SEC has shown respect for that. Still, the ease with which Tweet-monitoring procedures could be put in place must be a relief – and an indication of how possible it is with a certain other Commander in Chief.