Tesla Replaces Elon Musk With New Board Chair
By settling, Musk neither admitted or denied misleading investors.
Numerous reports suggested Musk and Tesla had declined to settle the case when the SEC initially brought the charges, and there has been no comment from either on the deal at time of writing. As CEO, Musk will essentially remain in day-to-day charge of the firm, but he will likely face more oversight and control from the board and the new chairman. As Tesla's largest shareholder, Musk is likely to retain a seat on the board, and have influence in determining his successor as chair.
By allowing Musk to stay on as CEO under the settlement, the SEC has avoided the possibility that removing Musk from Tesla could cause investors to lose faith in the company's ability to thrive without him, potentially leading to more instability in its share price and value.
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The £30.6m of penalties paid by Musk and Tesla will be distributed to investors harmed by Musk’s tweet.
Stephanie Avakian, the co-director of the SEC’s enforcement division, said: “The total package of remedies and relief are specifically designed to address the misconduct at issue by strengthening Tesla’s corporate governance and oversight in order to protect investors.
“The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders.”
According to CNN, the US Department of Justice is also investigating if Musk's tweet constituted a criminal activity. The SEC is also continuing to investigate a separate case relating to Tesla's production goal claims.
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