This comes as the settlement of a government lawsuit that alleged Musk of duping investors with misleading statements of going private
A few months back, Elon Musk, Chairman and CEO of Tesla tweeted through his official handle that the company is going private. “Am considering taking Tesla private at $420. Funding secured.” This announcement led to a quick rise in the stock prices but they later fell again. Meanwhile, the Securities and Exchange Commission (SEC) found these claims ‘false and misleading’.
Subsequent to Musk’s first tweet, he made it sound like all that was needed to take the company private was to de-list the company and then secure the approval from the shareholders. He also claimed that Saudi Arabia’s sovereign wealth fund was in talks to fund Tesla’s effort. He eventually abandoned the idea on 24th August. According to the SEC, Musk hadn’t even discussed, much less confirmed, key deal terms with any potential source.
Tesla and Musk have agreed to settle the lawsuit with an agreement to pay $40 million ($20 million each). Apart from the fines, Musk will have to step down from his role as Chairman of Tesla for three years. He has 45 days to leave the role – he continues to be CEO of the firm though. Additionally, Musk will now have to comply with the communication procedures of the company when tweeting about it.
With Musk stepping down from his position as Chairman, his power in the company is likely to reduce. But some analysts continue to believe that the outcome is a positive one for Musk given that he remains in-charge of day-to-day operations as CEO.