Tuesday, 20 November, 2018

Elon Musk Rejected SEC Settlement At Last Minute

Media playback is unsupported on your device                  Media caption Who is Elon Musk Media playback is unsupported on your device Media caption Who is Elon Musk
Scott Davis | 30 September, 2018, 01:35

The SEC alleges that Musk's itchy Twitter fingers "caused market chaos and harmed Tesla investors" - both people who bought Tesla stock after Musk's going-private tweet only to find out they'd been misled, as well as Tesla short-sellers who got burned by the rapid market action that only occurred because Elon Musk tweeted a thing. "But if they bring high-profile cases, everybody sees them, and if they win, that sends a message".

Tesla stock plunged 14 percent to $264.77 Friday, wiping out $7.3 billion in shareholder value.

Musk stated on Thursday that the SEC's allegations were "unjustified" stating: "I have always taken action in the best interests of truth, transparency and investors".

Tesla will have to pay a second $20million fine, and appoint two independent directors to replace Musk. "Without Musk, investors may no longer be willing to continue funding a company that has never reported an annual profit".

It remains unknown who started the shop, or if funds made from selling the products will help cover billionaire Musk's defense fund. "In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source", the SEC said in the complaint filed in federal district court in the Southern District of NY. Analysts at investment-research firm CFRA said Musk's "erratic behavior" and uncertainty about his future could cement the case as a "serious blow". "That role could be completely impossible for Elon to play", Brauer said. Today's ~14 percent drop was the worst day in Tesla's history since way back in 2013. "Shareholders want him to stay on as the visionary".

Some analysts are concerned about what Musk departure could do to Tesla's stock.




Those legal skirmishes could ramp up pressure on the board to map out a post-Musk succession plan as questions grow over his fitness for the job.

Last month, Musk said during an interview with The New York Times that he wrote the tweet in his vehicle on the way to the airport and no one reviewed it.

It was irresponsible of Musk, as the CEO of a $50 Billion, publicly traded company, to tell his over 22 million followers something without much groundwork.

"He needs to settle, and the Tesla board needs to force him to settle", said John Coffee, director of the Center on Corporate Governance at Columbia Law School. The SEC declined to comment on the settlement reports. But Musk has vowed to fight the charges.

That, in turn, could make it more hard to raise more money to stay alive, particularly in the coming months, with $1.3 billion in debt payments coming due by early next year. Agreeing to a settlement that would mean giving up his power "changes his whole identity".

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