Elon Musk Cannot Return as Tesla’s (NASDAQ:TSLA) Chairman W/O Shareholder Vote
- The vote shows the SEC is protecting investors.
If Tesla (NASDAQ:TSLA) CEO Elon Musk, 47 anni, ever wants to return as Chairman, shareholders will have to vote on it.
The requirement is detailed in a court brief filed jointly Thursday by Tesla and the Securities and Exchange Commission (SEC).
Mr. Musk and Tesla agreed to pay $20 million each and make concessions to settle an SEC lawsuit alleging Mr. Musk duped investors with statements about his ‘420’ plan to take the company private.
The settlement allows Mr. Musk to remain CEO but requires him to relinquish his role as Chairman for at least 3 years. After that time, a majority of shareholders must approve his return to lead the company’s board.
US District Judge Alison Nathan ordered the brief to show the settlement was “fair and reasonable,” which is a common practice in the court. She has yet to rule on the agreements with Mr. Musk and Tesla.
The SEC accused Mr. Musk of committing securities fraud due to an 7 August Tweet in which he declared he had secured to finance taking the company private at 420/share, a huge premium over the stock price at the time.
The commission alleged that Mr. Musk hadn’t locked up the estimated $50-B that it would have required to complete the deal, and punished him by forcing him out as Tesla’s boss.
Initially rejecting an SEC offer to settle the case, Mr. Musk relented 2 days after the fraud complaint and agreed to resolve the matter by paying the penalty, stepping down as Chairman and agreeing to oversight about his communications on company news.
But the deal with the Commission did not prevent Mr. Musk from continuing to speak out about other subjects, apparently to include directly mocking the SEC.
Mr. Musk taunted the SEC just days after the 29 September settlement was announced, calling it the “Shortseller Enrichment Commission” before snidely praising it for “doing incredible work.”
The Tweet fueled Mr. Musk’s long-running feud with Short sellers, a category of investors that have been betting on Tesla’s stock to fall.
No mention was made in the brief about Mr. Musk insulting the Commission on Twitter early this month, so he apparently will not face any punishment for that.
Mr. Musk insulting the SEC was really NutZ, but he did not violate securities laws, as he was exercising his free speech rights.
As part of Mr. Musk’s settlement with the SEC, Tesla is supposed to monitor its CEO’s Twitter posts, but only those that have to do with company news.
The latest Tweet: Elon Musk tweeted a reply to a FT report stating James Murdoch is the lead choice for Tesla’s new Chairman, saying, “This is incorrect.”
The SEC when contacted would not comment Thursday.
Shares of Tesla closed down 1.8% at 252.23 Thursday in NY.
Tesla is not an investment stock, it is a speculation that should be played by professionals only. Caution, there is no market support for Tesla shares in here.
HeffX-LTN’s Overall Outlook for Tesla is Bearish to Very Bearish