Elon Musk To Step Down As Tesla Chairman Post SEC Settlement

Facing repercussions of his abandoned attempt to take Tesla private, Elon Musk has been forced to step down as chairman of the electric carmaker in a settlement with the Securities and Exchange Commision in the US.

Though Musk continues to be the company’s CEO, he will not be re-elected as chairman for another three years, the SEC directed in its settlement. The settlement comes in the wake of charges levelled against Musk for trying to mislead investors by tweeting that he had received financing for a deal to go private. The said tweet claimed that Elon Musk could take Tesla private at $420 per share — a substantial premium to its trading price at the time.

As part of the settlement, both Musk and Tesla will pay fines of 20 million USD each (roughly Rs 145.6 crore) to be distributed among harmed investors under a process overseen by the court. In a bid to reform its corporate governance, Tesla is also being asked to hire two new independent directors for its board and will also have to monitor Musk’s tweets and other social media interactions.

“The total package of remedies and relief announced are specifically designed to address the misconduct at issue by strengthening Tesla’s corporate governance and oversight in order to protect investors,” said Stephanie Avakian, co-director of the SEC’s Enforcement Division.
Allegedly, several reports suggested that Musk had to settle with higher penalties as he had walked away from a settlement earlier which would have stripped him of some key leadership duties, but involved much smaller fines. The SEC had opened its investigation into the matter in August after Musk’s tweet.