After the U.S Securities and Exchange Commission (SEC) filed a lawsuit for fraud against Elon Musk on Thursday, which, subsequently, did not go to trial, Musk agreed to step down as chairman of Tesla.
Both Elon Musk and Tesla also agreed to pay $20 million in penalties each. The money will be divided among the investors that were harmed by Musk’s tweets about Tesla going private. As part of the agreement, Musk is not obligated to admit nor deny the SEC allegations against him.
This still counts as the best outcome, actually, because the SEC could have easily banned Musk from serving as either an officer or a director in any public company.
Musk has 45 days to resign from his role as chairman, as of Saturday, and he has allegedly agreed he will not try to get reelected or accept any appointment as chairman for the next three years.
I also fully support the settlements agreed today and believe that the prompt resolution of this matter on the agreed terms, including the addition of two independent directors to the Tesla board and the other governance enhancements at Tesla, is in the best interests of our markets and our investors, including the shareholders of Tesla.
– Jay Clayton, SEC Chairman
Some have argued that Elon Musk has been controlling Tesla too tightly and now, with two new independent directors to be added to its board – neither of them linked to Musk – and a new committee formed of other independent directors that will oversee Musk’s communications, it seems like the company is in for a fresh start.
If it will prove to be for the best or not, that remains to be seen.
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