SEC forces Elon Musk to resign as Tesla Chairman

Tesla CEO Elon Musk will step down as chairman of the electric car company. He will pay a $20 million fine under a settlement reached with the U.S Securities and Exchange Commission (SEC). Musk will remain CEO and keeps a seat on the board.

Musk will resign as chairman of the Tesla board within 45 days. He will not seek reelection or accept an appointment as chairman for three years.

Musk doesn’t have to admit or deny the SEC’s allegations as part of the agreement.

This was caused by Elon tweeting out in August that he was thinking about taking Telsa private at $420.

There had been discussions and a claimed verbal offer of a buyout of Tesla by Saudi Arabia. Saudi Arabia had bought about 5% of Tesla.

Musk met with representatives of the Saudi Arabia’s sovereign wealth fund three or four times beginning in January 2017.

The fund did expressed a verbal desire to make a big investment in Tesla and establish a production facility in the Middle East.

Musk met with the fund’s lead representative on July 31, 2018. This is when he learns the fund has acquired almost 5 percent of Tesla’s common stock. The representative expresses interest in taking Tesla private and asks about establishing a production facility in the Middle East. Musk said he was open to the idea, but did not make a commitment. The representative did tell Musk that as long as the terms were “reasonable,” the fund would be fine with them.

Musk did not communicate with representatives of the fund again about a going-private transaction until August 10, three days after his August 7 statements.

Musk was talking to the Tesla board about an offer to take Tesla private as early as August 2 when he sent to Tesla’s board of directors, chief financial officer and general counsel an email with the subject, “Offer to Take Tesla Private at $420.”

The email laid out his reasons for wanting to take Tesla private. Elon thought constant defamatory attacks by the short-selling community would resul in great harm to Tesla’s valuable brand.

Saudi Arabia chose not complete the deal and left Elon and Tesla hanging.

Clearly it was a mistake for Elon to trust Saudi Arabia verbal statements and should not have expected more was happening before more commitment was made.

Elon will likely be restricted in his of twitter in regards to Tesla.

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