Arguably one of the most popular entrepreneurs, Elon Musk has always taken the spotlight for everything he does and says in the business world.
This time, however, he has found himself on the other side of things, as he was recently investigated by the Securities and Exchange Commission (SEC) following his tweet about having funding secured to take Tesla Inc private at $420 per share. The result of this investigation was that Musk will have to step down as Chairman of Tesla and pay a $20 million fine. It’s estimated that Musk will be able to keep his job as CEO while paying the fine.
Why did Elon Musk settle?
Elon Musk decided to settle for $20 million with SEC, but he’s not admitting guilt over his infamous funding secured tweet. In fact, Elon insists that he’s being coerced into settling so that a drawn-out court case doesn’t hurt Tesla financially. If a judge rules against him and demands that he pay $20 million in fines and step down as CEO for three years, it could make matters worse for both him and Tesla. The SEC is investigating why exactly Elon decided to tweet what he did; so far, Elon has never really given an official reason as to why he made those statements — other than they were 100% true at the time.
It’s no secret that Elon is under a lot of pressure. He’s on a mission to bring electric cars to every household, and he needs every dollar he can get to make that happen. In its most recent quarter, Tesla lost $710 million, which means it’s going to have trouble raising new funds in order to move forward with its ambitious growth plans. With only $2 billion in cash on hand and $9 billion in debt, Elon has got to step up his game if he wants Tesla — and his role as CEO — to survive into 2019.
How much did he pay in fines?
Elon Musk will pay a $20 million (£15.4m) fine and step down as Tesla chairman to settle fraud charges brought by America’s top stock market regulator, it was announced on Saturday. The Securities and Exchange Commission (SEC) charged Mr Musk with misleading investors over his claim that he had secured funding to take Tesla private in August. The deal was revealed after trading hours on 7 August when Mr Musk tweeted that he had funding secured for a deal that would take Tesla private at $420 per share. He wrote: Am considering taking Tesla private at $420. Funding secured. Shares rose before markets opened, leading some commentators to suggest Mr Musk had broken laws preventing traders from making misleading statements about material events.
The settlement requires that Mr Musk step down as chairman of Tesla within 45 days, a role he will be allowed to return to if he agrees to abide by company procedures and controls for two years. In addition, Mr Musk will be fined $20m but has avoided being disqualified from serving as an officer or director at any public company. Both Mr Musk and Tesla were charged with misleading investors and Mr Musk was also charged with making false statements. As part of his settlement deal, neither he nor Tesla has admitted or denied wrongdoing.
Will Elon Musk serve time in prison?
The question isn’t whether he will serve time in prison, but rather how much time. The maximum sentence for fraud is 20 years. However, a judge may agree to another form of punishment such as a fine or probation in addition to any time served. Elon Musk had better hope that his funding secured tweet doesn’t end up costing him more than $20 million dollars. If Musk ends up paying that much or more in fines, it would be just shy of 1% of his fortune and about 3% of his Tesla holdings.
After reaching a settlement with US regulators, Elon Musk posted on Twitter that this is apparently what happened when [I] ignore comments to take [my] personal life seriously. In addition to his tweet, Musk also wrote an email saying: Under any normal circumstances, I would have fought until my last breath. That’s what any rational person would do. But I thought it was more important to take care of my employees and my investors. To be clear, I did not admit guilt under their terms or conditions.
Will Elon Musk resign from Tesla?
Elon Musk’s decision to pay a $20 million fine and step down as Tesla chairman won’t end his investigation with regulators. The Securities and Exchange Commission is investigating whether Elon Musk violated a court order when he tweeted about his plan to take Tesla private, according to two people familiar with its probe. If true, it would be a major blow for Elon Musk in particular and Silicon Valley in general. This is of paramount importance because if Elon musk is indeed sued by an authority like the Securities and Exchange Commission(SEC), he would certainly have to step down from Tesla or might lose some other rights which are associated with his current position at Tesla.
Elon Musk stepped down as Tesla’s chairman on Tuesday, under an agreement with securities regulators who had brought a case against him for his public statements about taking Tesla private. The Securities and Exchange Commission will continue to investigate whether Elon Musk violated a court order when he tweeted on August 7 that he had funding secured to take Tesla private at $420 a share, according to two people familiar with its probe. If so, it would be another blow for Elon musk in particular and Silicon Valley in general. It would also raise questions about whether Mr Musk is following through on his promise last week to behave better on Twitter. So far, at least, there is no indication that Mr.
What does this mean for Tesla investors?
The Securities and Exchange Commission lawsuit against Elon Musk over his August tweet that Tesla had enough funding to go private (TSLA) has been settled. In settling, Musk and Tesla didn’t admit or deny guilt. The deal allows Musk to remain CEO of Tesla and puts some checks on his actions in future tweets. While it seems clear he was coerced into settling, there are two ways for investors to view it: as a positive, or a negative.
For example, in a statement on his Twitter account, Musk said that Tesla will be profitable & cash flow+ in Q3 & Q4, so obviously no need to raise money. The problem with that argument is that revenue is not profit – it’s revenue minus expenses. While net income can be positive or negative depending on whether revenue exceeds or doesn’t exceed operating costs, gross profit – revenues minus cost of goods sold – isn’t affected by selling more units if those units are still being sold at a loss. If Tesla was on track to turn an overall profit in Q3 and Q4, that would indicate an end to its capital-intensive period of expansion and rising production costs before any payoff from higher sales volume could occur.
Does it suggest an SEC crackdown on social media?
The argument that I’m trying to make to you, your honour, is that it’s unjust and unfair for them to use one of my tweets when they know it’s not representative of my beliefs, Musk said. If I say something that is factually true but then they believe there was some ulterior motive, is it right for them to punish me for that? Whatever truth there may be in his case, it’s obvious he doesn’t agree with what he did or said and he wants us to know. That’s probably a good sign!
The settlement was a result of Musk’s tweet on 7 August that he had secured funding to take Tesla private at $420 (£323) per share. The tweet came after his meeting with Saudi Arabia’s sovereign wealth fund and although he later said no final decision had been made, it created a stir in financial markets and drew scrutiny from regulators. In response to CNBC’s question on whether regulators are overreaching by prosecuting him for his use of social media, US Securities and Exchange Commission Chairman Jay Clayton said: We will take enforcement action if people violate our rules. That’s what we do.
Is there an investigation being conducted on anyone else from Elon musk’s team at Tesla?
On February 20, Elon Musk tweeted that he had secured funding to take Tesla private at $420 per share. Three weeks later, following a number of clarifications and more confusion about whether such a transaction was actually in motion, Musk and Tesla reached an agreement with the Securities and Exchange Commission to settle allegations from investors who believed they were misled by his tweets. The deal required Tesla to pay a $20 million fine while its CEO had to step down as chairman for three years and pay a penalty of $20 million. If you’re interested in whether or not anyone else is being investigated by federal regulators over anything related to Tesla or Elon musk’s other companies, here’s what we know: U.S.
To date, no one else from Tesla has been accused of any wrongdoing by federal regulators. In fact, according to Tesla’s most recent quarterly report to investors (from early February), all of its current executives are in good standing with their board and regulatory bodies. Two of them were even promoted in January when Antonio Gracias and Kimbal Musk—Elon musk’s brother—were both named non-executive chairmen. At SpaceX, which like Tesla is based in Hawthorne, California, there’s also a high standard for complying with regulatory authorities.
What is the future of Tesla following this investigation and settlement by Elon musk?
After news of Elon musk’s settlement with the US Securities and Exchange Commission broke yesterday, Tesla’s stock has taken a bit of a tumble, dropping 3.2% to $264.15 at the time of writing. But according to MarketWatch’s Rick Newman, Elon musk’s actions could be for the best. The suit claims that in truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source. This means Elon was potentially losing out on far more than just what he settled for.
If I was just guessing, I’d say Elon musk wants to be able to talk freely about Tesla and other companies in which he has a stake. He might have wanted to own those stakes outright, or he might have wanted to transfer them from one holding company to another, Newman says. But because of his settlement, he can’t do any of that for at least three years. So if there are other potential investors out there who don’t like being legally gagged by their owners, they may want nothing to do with him or his car company going forward.
If so, they’ll pass on investing in Tesla, and Elon will be forced to sell all his shares — probably at a much lower price than what he would get right now. The end result is that he’s hurting himself by settling with the SEC when he didn’t have to. I know what you’re thinking — it can’t be that bad. After all, even though Tesla stock dropped after news of Elon musk’s settlement broke yesterday, it only went down a little more than 1% from its highs earlier in September.
