Elon Musk hasn’t been one to shy from controversy. The brainchild of Tesla has more than once been associated with more than one actions that have landed him in trouble with his investors and even the media. From smoking weed on a live show to accusing a Thai cave rescuer of being a paedophile and even dismissing investors’ and analysts’ questions as boring during a Tesla earnings report.
Now, Elon Musk has found himself in trouble after what seemed like a harmless tweet of him announcing his intentions to take the company he founded private:
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
After this “announcement, Tesla’s share price spiked from $344 to $380 with reports that Saudi Arabia had bought $2 billion worth of shares in the company. The effects of this tweet, which he said was not just a weed joke (referring to the seemingly random $420 price), is what has landed the 47-year-old business magnate in trouble, despite later on tweeting that he was no longer considering taking the company private.
A few weeks after the tweet, US’ Securities and Exchange Commission (SEC) sued him for securities fraud. SEC’s lawsuit sought to ban Elon Musk from ever holding an office in a publicly traded company. SEC claimed that Elon’s tweet was misleading and false, they say that Elon, “had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source.”
Two days later, Elon Musk and SEC reached a settlement that will leave a 20 million dent on the Billionaire’s pockets. In the settlement, Elon Musk is to pay a $20 million fine and Tesla will also pay a similar amount separately, totalling the fines to $40 million. SEC says that this amount will be distributed to harmed investors under a court-approved process.
On top of this, Elon Musk will also be required to resign as Chairman of Tesla within 45 days and he shall also be prohibited from holding this post for at least 3 years, however, he shall remain as CEO. Tesla has already agreed to the settlement and the company will also be required to appoint two new independent directors to its board and hire a lawyer to monitor Musk’s communications, including his tweets.