Elon Musk, the controversial yet charismatic CEO of electric motor company Tesla will step down as chairman. This decision comes after mounting pressure from U.S Securities and Exchange Commission (SEC). As per part of the settlement, Musk will also have to pay a $20 million fine.
The deal was completed on 29th of September. Starting from 29th he will have 45 days to finish all his due commitments and step down as chairman of Tesla board.
Musk has agreed to not accept reappointment as chairman of the board, or contest re-election for the position for another 3 years. As per the settlement agreement, an independent chairman will be appointed.
Tesla will pay another $20 million fine because of Musk’s tweets related to manipulating its stocks.
The SEC wants to restrict Musk’s communication on Twitter and have an overall control over his actions. In order to appease SEC’s wishes, Tesla has agreed to bring on two independent directors to its board.
The SEC remarked that from now on Tesla will establish further procedures and controls to keep a better track on Musk’s communication.
This means Musk will have to be more careful the next time he logs on to Twitter. SEC’s Enforcement Division’s Steven Peikin said in a statement, “The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders.”
This decision will bring forth a new dawn for the legacy of the electric motor company. Many shareholders believed that Musk had a stranglehold over Tesla and had the final say on a lot of internal decisions.
He had also given some of his closest friends special privileges, especially his brother Kimbal Musk.
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Tesla has tried to diversify its board so as to bring in people from different walks of life. All of whom have a unique area of expertise, a variety of experiences and vast knowledge in their line of work.
Some good examples are Chairman and CEO of Johnson Publishing Company Linda Johnson Rice and the CEO of Twenty-First Century Fox Inc. James Rupert Murdoch. This seems was all done in vain.
The SEC had made a formal complaint in federal district court on 27th September 2018 regarding Musk’s tweets. They claimed that Musk had fraudulently lied in his tweets, about the company finding a private investor that wants to take over Tesla.
Musk had created a whole stock exchange chaos when he tweeted that he will buy back all sold shares at $420 per share. This tweet was made on August 7TH. Naturally, everyone who saw this tweet, started selling their shares for a significant profit.
All due to how arrogantly and stupidly Musk tweeted for the whole world to see without thinking of the repercussions. Musk had been partaking in really peculiar and erratic behavior for the past few months.
Earlier he accused one of the Thai football team’s rescuers a pedophile. The diver then sued Musk for libel. Hopefully, by stepping down, Musk will have some room to breathe and think clearly for a change.