Elon Musk to resign as Tesla Chairman, will remain CEO
What's the story
Elon Musk has reached a settlement with Securities and Exchange Commission (SEC) over fraud charges, as a result of which he will step down from the Chairman post of Tesla. Musk will continue to remain the CEO of the electric car making company.
He will also have to pay $20 million to financial regulators.
The last two months have been tumultuous for the company.
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Musk's tweet about taking company private hurt investors: SEC
In court filings, SEC argued Musk's August tweets where he spoke about taking the company private hurt investors. The regulator said Musk's tweet had no basis and created market chaos.
Musk tweeted Tesla's share will cost $420 and Steven Peikin, co-director of the SEC's enforcement division said he assumed "20 per cent premium over Tesla's then existing share price, rounding up to $420."
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Musk hoped to impress girlfriend with 'taking Tesla private' stunt
Further, SEC alleged Musk's stunt was to impress his girlfriend, singer Grimes. He rounded up to $420 "because of the significance of that number in marijuana culture and his belief that his girlfriend would be amused by it," Peikin pointed out.
Resignation
In 45 days, Musk has to resign
Musk will have to resign in 45 days and stay out of the board for three years. SEC said neither Musk nor Tesla admitted or denied the allegations.
As part of the settlement, Tesla's board will add two independent directors, and follow other government enhancements.
"The fact that he can remain CEO is important for the company," said Ivan Feinseth of Tigress Financial Partners.
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SEC Chairman says company insiders have to behave responsibly
"When companies and corporate insiders make statements, they must act responsibly, including endeavoring to ensure the statements are not false or misleading and do not omit information a reasonable investor would consider important in making an investment decision," said SEC chairman Jay Clayton.
Musk's behavior
Musk's volatile conduct has spelled trouble for Tesla
Musk, who is deeply involved in the company's product design and technological strategy, has invited trouble over his volatile behavior.
He smoked marijuana on a live-podcast on the same day recently-appointed accounting chief of Tesla left.
Musk also called Vernon Unsworth, the cave-diver who rescued Thai boys, a paedophile and then wondered why wasn't he sued yet. He was sued.