Tesla’s (NASDAQ:TSLA) Settles with SEC, Musk Ousted as COB
Tesla (NASDAQ:TSLA) and its COB/CEO Elon Musk, 47 anni, have agreed to pay a total of $40-M and make a series of concessions to settle an SEC lawsuit alleging Mr. Musk duped investors with misleading statements about a proposed buyout of the company.
The settlement allows Mr. Musk to remain CEO of the niche EV company, but requires him to relinquish his role as Chairman for at least 3 years. Tesla must now engage an independent Chairman to oversee the company.
The Securities and Exchange Commission (SEC) announced the settlement Saturday, just 2 days after filing its suit seeking to oust Mr. Musk as CEO.
The deal may remove 1 of the dark clouds hanging over Tesla and Mr. Musk
Investors stressed about the company’s ability to continue without Mr. Musk a charismatic entrepreneur who could sell new ideas to a Wall Street desperately seeking technical innovations.
Tesla’s stock dove 13.9% Friday after the SEC filed its lawsuit, erasing more than $7-B in shareholder wealth. Many analysts predicted the shares were bound to fall even further if Musk was forced to step down.
The steep downturn in Tesla’s market value likely influenced Mr. Musk change his combative stance, and negotiate a settlement with the commission.
Late Thursday, Mr. Musk rejected a similar settlement offer before the SEC sued, maintaining he had done nothing wrong when he posted his 7 August ‘420’ Tweet declaring that he had secured the financing to lead a buyout of Tesla from the Saudi PIF.
The SEC alleged Mr. Musk was not even close to locking up the estimated $25 to 50-B needed to make the perceived buyout transaction happen. Mr. Musk said on the record that he believed the Saudi’s were ‘aboard’ as they already invested $2.2-M in the open market to by 4.9% of the company, the Saudi’s said no.
Mr. Musk and Tesla reached their settlement without admitting to or denying the SEC’s allegations.
It is unclear at this writing if Mr. Musk was allowed to retain his seat on the Board.
Neither the SEC or Tesla have immediately responded to a request for comments.
It is still our opinion that Tesla is a speculation for professionals only and not an investment.
As of the close of business Friday, HeffX-LTN technical analysis for Tesla was Bearish to Very Bearish.
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