Judge OKs $40M fine for Musk, Tesla over tweets
A U.S. judge on Tuesday approved a settlement between a federal regulator, Tesla and its chief executive officer, Elon Musk, over his tweets promising to take the company private.
Tesla shares are down more than 20 per cent since Aug. 6, the day before Musk said on Twitter he would take the company private and claimed he had secured funding to do so.
Under an agreement with the SEC, Musk has agreed to pay a US$20-million fine and step aside as Tesla’s chairman for three years to settle charges that could have forced his exit from Tesla.
The company will also pay a US$20-million fine, despite not being charged with fraud.
Under the settlement announced on Sept. 29, Tesla must appoint an independent chairman, two independent directors and a board committee to control Musk’s communications.
Twitter has frequently been Musk’s go-to venue for freewheeling communications and confrontation with Tesla’s critics.
The stock dropped last month after the SEC accused Musk, 47, of fraud over his “false and misleading ” tweets on Aug. 7.
On Oct. 4, just hours after Judge Alison Nathan of the U.S. District Court for the Southern District of New York ordered him and the SEC to explain why their settlement was fair and reasonable, Musk appeared to mock the SEC on Twitter.
“Just want to that the Shortseller Enrichment Commission is doing incredible work,” Musk, a frequent critic of the investors who have bet against the company, wrote.
“And the name change is so on point!”
Musk has gained legions of fans for his bold approach to business and technology, using his 23 million Twitter followers to promote Tesla, his rocket company SpaceX, and tunnel venture Boring Co.
But the Aug. 7 claim that he had the funding to take Tesla private, and a subsequent U-turn, stunned Wall Street.