Elon Musk has agreed to pay $20 million and to step down as chairman of the electric car company to settle a dispute leveled by the U.S. Securities and Exchange Commission (SEC).
The SEC announced the settlement in a statement Saturday, Sept. 29, 2018.
The settlement requires that Musk step down as Tesla’s chairman within 45 days, and will be ineligible to be re-elected chairman for three years. Musk and Tesla must also pay $20 million each, for $40 million total in penalties. The SEC says it will be distributed to harmed investors under a “court-approved process.”
Elon Musk’s problems, at least publicly, began in early August when he sent an email to his employees announcing that he was “considering taking Tesla private at a price of $420/share.”
Several weeks later, after no doubt causing a great deal of consternation and panic among Tesla’s investors, Musk reversed course on taking his billion-dollar company private.
Then in September when Musk smoked weed on Joe Rogan’spodcast, not only did his investors freak out, there were reports that Musk’s US government security clearance was under review. Musk has s security clearance because of his other company, SpaceX, which provides satellite launch services to the U.S. government.
Now, to add to the Musk mess, the Security and Exchange Commission (SEC) filed a lawsuit on Sept. 27, 2018 accusing him of having made “false and misleading” statements when he spoke of taking Tesla private.
While Musk did not have the funding to go private and did not have any conversations with investors about it, the SEC moved forward to sue him and ban him from holding a leading position in other public companies.
The SEC claimed that the tweet about taking Tesla private for $420 per share was a weed joke made for the benefit of his girlfriend, the singer Grimes.
According to the SEC, “Musk stated that he rounded up the price to $420 because he had recently learned about the number’s significance in marijuana culture and thought his girlfriend ‘would find it funny, which admittedly is not a great reason to pick a price.’”
Musk, however, told the Business Insider that the $420 was not a weed reference.
“‘It seemed like better karma at $420 than at $419,” Musk said. “But I was not on weed, to be clear. Weed is not helpful for productivity.’”
As Musk leaves Tesla, many wonder about the fate of the company.
“Without Musk, Tesla is just a really well engineered car company with too much debt and burning too much cash,” said D.R. Barton, chief technical analyst at MoneyMorning.com.