On Tuesday, United States Judge Alison J. Nathan signed off on the proposed settlement between the Securities and Exchange Commission, Tesla and its CEO, Elon Musk. This settlement puts to rest the SEC’s action against Musk regarding his now infamous (and allegedly fraudulent) Tweet, where he claimed that he had “funding secured” to take Tesla private at $420 per share.
The settlement approval came despite Elon Musk publicly mocking the Securities and Exchange Commission to his 22 million Twitter followers just 12 days ago, labeling it the “Shortseller Enrichment Commission”.
Despite Musk’s all too public mockery of the regulator, both the SEC and Musk filed letters with the court last Thursday making the case for why the settlement should be approved. “We therefore respectfully submit that the court should accept and enter the proposed consent judgments,” they both told the court.
As part of the settlement, Musk agreed to pay a $20 million fine and step out of the board’s chairman role. The company has yet to announce any prospective replacements for Musk as chairman of the board. In addition, Tesla also had to pay a $20 million fine. FT had reported last week that James Murdoch was the frontrunner to replace Musk, but that headline was ultimately refuted by Musk on Twitter.
As part of the settlement, Tesla needs to appoint an independent chairman, as well as two independent directors. On top of that, the company is tasked with appointing a board committee to monitor any public communication that the embattled CEO makes. Skeptics on Twitter have pointed out that since the proposed settlement, Elon Musk’s mother’s Twitter account has seen a suspicious surge in Tesla-related Tweets. We’re sure it’s probably just a coincidence.
The SEC reportedly still has a second probe ongoing into Tesla, investigating Model 3 production numbers and targets issued by the company. The DOJ also reportedly still has an open investigation into the company.
We’re not sure what the over/under is on the number of days before Musk violates the terms of the now memorialized settlement, although judging by TSLA’s stock price, the market is clearly not worried…
However, in context, Musk has a long way to go…
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