Elon Musk to Resign as Chair of Tesla Board but Remain CEO

Ann Santiago
October 1, 2018

The CEO of Tesla, of course, Elon Musk's Twitter communications have always been patchy and seemingly unreflected.

The agreement eases pressure on Tesla's embattled CEO, who faced potentially being barred from serving as an officer or board member of a publicly traded company as a result of the charges, which stemmed from a tweet by Musk about taking the company private.

"The $40 million in penalties will be distributed to harmed investors under a court-approved process", the SEC said. "Funding secured." Later on, the SEC ruled that Musk never went through with his declaration and deal between the company and the Saudi sovereign wealth fund set to foot the bill on the buyout. Tesla itself has also been slapped with a $20 million fine by the SEC, making Musk's tweet one of the most expensive in history. Tesla is required to appoint two new independent directors to its board.

"When companies and corporate insiders make statements, they must act responsibly", SEC Chairman Jay Clayton said.


But several experienced litigators said on Monday that, while the DOJ probe is separate, the SEC's settlement could mark the end of official action against Tesla and Mr Musk.

Tesla shares sank last week after the SEC filed a lawsuit accusing Musk of securities fraud and demanding the Silicon Valley billionaire be removed his role as chief executive.

"The total package of remedies and relief announced today are specifically created to address the misconduct at issue by strengthening Tesla's corporate governance and oversight in order to protect investors", said Stephanie Avakian, the SEC's co-director of enforcement.

Analysts expect Wall Street will now be able to focus more on third quarter production numbers for the company's Model 3 sedan this week. On Saturday, the SEC released an update announcing that Musk had accepted a settlement for his lawsuit. Munster pointed out that the terms of the settlement actually works in Tesla's favor, as the appointment of a new, capable Chairman of the Board could help Tesla reach sustainability, as well as become the wake-up call that Musk needs with regards to his behavior online.

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