Musk Quite Literally Pays The Price For His Tweet, As SEC Asks Him To Pay $20 million

Elon Musk’s reckless Tweets have finally caught up with him. The bit about re-privatising Tesla, in particular, caused an uproar, taking a toll on share prices as well as Musk’s credibility. And now the inevitable has happened, as U.S. Securities and Exchange Commission (SEC) has asked him to pay a price for his misleading tweets.

The Tweet That Wiped Out Billions In Value From Tesla

In a bid to avoid a drawn-out court case, Elon Musk has opted for a settlement with federal regulators who had sued him for making a misleading statement. He gets to keep the title of CEO, but will no longer be the chairman of the company’s board. Moreover, he has been fined $20 million. However, that’s not all as Tesla is also required to pay $20 million separately and the combined amount will be used to pay investors that reportedly had to bear the brunt of the tweet.

Am considering taking Tesla private at $420. Funding secured.

— Elon Musk (@elonmusk) August 7, 2018

Musk, who is required to step down as the chairman within 45 days, will not be eligible for re-election to the post for three years. As a part of the settlement, two independent directors will be appointed by Tesla for its board and a new committee will also be created to ensure company procedures are adhered to for any future communications regarding Tesla. This also includes Musk’s Twitter account.

For the uninitiated, Musk had tweeted in August that he is planning to take the company private. Although, he tried to backpedal, it was too late by then. The SEC has accused Musk of making misleading public statements that have sent its stocks tumbling down, harming the investors. Musk was reportedly going to settle with the SEC earlier but decided against it when he thought that the charges against him were unjustified. The resulting lawsuit could have prevented him from being the director or officer of any public company for the years to come.

Also Read: Elon Musk faces charges by SEC because of his ‘funding secured’ tweet

Both Musk and Tesla have neither admitted nor denied the charges filed by the SEC, but settling is a smart move as the last thing the beleaguered company needs right now is a court case. Hopefully, the new chairman will help Musk offload some work and concentrate on mobility-related innovations instead.

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