Elon Musk has agreed to step down as Tesla Chairman and pay a fine as per the settlement between him and US regulators after he posted tweets last month about taking Tesla private. In a recent decision, Securities and Exchange Commission (SEC) concluded that Musk will remain as Tesla CEO but will have to step down as chairman for at least three years. Besides this, both he and Tesla would have to pay a fine of $20 million.
What were the tweets about?
The tweets were posted in August when Elon Musk said that he was considering taking Tesla off the stock market and into private ownership. He also stated that the necessary funding had been 'secured', which would bring one Tesla share at $420. After this announcement, Tesla shares rose briefly but eventually fell.
Shareholders could either to sell at 420 or hold shares & go private
— Elon Musk (@elonmusk) August 7, 2018
What did the SEC find?
According to the SEC, Musk's claims were 'false and misleading'. Musk never even discussed the deal terms, including price, with any potential funding sources, the regulator said. Musk responded by saying that the charges were 'unjustified' and that he acted in the best interest of all parties.
Elon Musk will vacate the post of Tesla Chairman, pay a $20 million fine, and now he is also required to comply with company communications procedures when tweeting about the firm. He has 45 days to step down from his role as the chairman.
A new "independent chairman" will be appointed for Tesla, who will preside over the company's board. Tesla separating the roles of chairman and CEO would also mean that Musk's powers within the company will also be limited.
Tesla in recent years has become one the most valuable American carmaker, with its stock worth more than $50 billion. However, the company has been struggling to achieve the ambitious production targets for the Tesla Model 3 that Musk had announced publicly.