SEC goes after Musk
The Securities and Exchange Commission today filed a complaint against Tesla in an effort to force Elon Musk out as head of the company.
The complaint filed by the Securities and Exchange Commission came after a last-minute decision by Mr. Musk and his lawyers to fight the case rather than settle the charges.
The filing by the SEC in federal court in Manhattan threatens to deal a severe blow to the Palo Alto, Calif., electric car maker. Its brand and Mr. Musk are closely intertwined, and analysts have said the company’s roughly $50 billion market value is driven by Wall Street’s appreciation for Mr. Musk’s vision and skill as an innovator.
SEC Sues Elon Musk for Fraud, Seeks Removal From Tesla
Tesla wasn’t named in the suit as a defendant, but the SEC is seeking to bar Mr. Musk, Tesla’s largest shareholder and its top executive, from serving as an officer or director of any U.S. public company. Tesla shares, which have been under intense pressure amid questions about the firm’s financial strength and Mr. Musk’s behavior, tumbled 9.9% to $277 in after-hours trading Thursday on Nasdaq.
This is very bad news for Tesla. However, it might be good news for SpaceX, as Musk has admitted to being very overworked. If he is forced from Tesla, he will have an enormous load removed from him.
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The Securities and Exchange Commission today filed a complaint against Tesla in an effort to force Elon Musk out as head of the company.
The complaint filed by the Securities and Exchange Commission came after a last-minute decision by Mr. Musk and his lawyers to fight the case rather than settle the charges.
The filing by the SEC in federal court in Manhattan threatens to deal a severe blow to the Palo Alto, Calif., electric car maker. Its brand and Mr. Musk are closely intertwined, and analysts have said the company’s roughly $50 billion market value is driven by Wall Street’s appreciation for Mr. Musk’s vision and skill as an innovator.
SEC Sues Elon Musk for Fraud, Seeks Removal From Tesla
Tesla wasn’t named in the suit as a defendant, but the SEC is seeking to bar Mr. Musk, Tesla’s largest shareholder and its top executive, from serving as an officer or director of any U.S. public company. Tesla shares, which have been under intense pressure amid questions about the firm’s financial strength and Mr. Musk’s behavior, tumbled 9.9% to $277 in after-hours trading Thursday on Nasdaq.
This is very bad news for Tesla. However, it might be good news for SpaceX, as Musk has admitted to being very overworked. If he is forced from Tesla, he will have an enormous load removed from him.
Readers!
Please consider supporting my work here at Behind the Black. Your support allows me the freedom and ability to analyze objectively the ongoing renaissance in space, as well as the cultural changes -- for good or ill -- that are happening across America. Fourteen years ago I wrote that SLS and Orion were a bad ideas, a waste of money, would be years behind schedule, and better replaced by commercial private enterprise. Only now does it appear that Washington might finally recognize this reality.
In 2020 when the world panicked over COVID I wrote that the panic was unnecessary, that the virus was apparently simply a variation of the flu, that masks were not simply pointless but if worn incorrectly were a health threat, that the lockdowns were a disaster and did nothing to stop the spread of COVID. Only in the past year have some of our so-called experts in the health field have begun to recognize these facts.
Your help allows me to do this kind of intelligent analysis. I take no advertising or sponsors, so my reporting isn't influenced by donations by established space or drug companies. Instead, I rely entirely on donations and subscriptions from my readers, which gives me the freedom to write what I think, unencumbered by outside influences.
You can support me either by giving a one-time contribution or a regular subscription. There are four ways of doing so:
1. Zelle: This is the only internet method that charges no fees. All you have to do is use the Zelle link at your internet bank and give my name and email address (zimmerman at nasw dot org). What you donate is what I get.
2. Patreon: Go to my website there and pick one of five monthly subscription amounts, or by making a one-time donation.
3. A Paypal Donation or subscription:
4. Donate by check, payable to Robert Zimmerman and mailed to
Behind The Black
c/o Robert Zimmerman
P.O.Box 1262
Cortaro, AZ 85652
You can also support me by buying one of my books, as noted in the boxes interspersed throughout the webpage or shown in the menu above.
This report gives more details of the “no-guilt settlement” Musk pulled out of at the last minute yesterday. “Under the terms of the deal, Musk and Tesla would have had to pay a nominal fine, and he would not have had to admit any guilt. However, the settlement would have barred Musk as chairman for two years and would require Tesla to appoint two new independent directors”.
Kirk–
thanks for that!
Bob, What I think you missed is the implication of
“…bar Mr. Musk, Tesla’s largest shareholder and its top executive, from serving as an officer or director of any U.S. public company”
This obviously means that among the firms he would have to retire from would be SpaceX. Of course he would remain its majority shareholder, so how he votes his block of shares would impact the company’s direction and presumably the board would consult with him and other large shareholders on various items but his influence on the company would be indirect.
It’s interesting that “Musk has admitted to being very overworked”. This is something that is apparently common among successful entrepreneurs , they’re not team players but one man shows and not able to delegate. This may be needed, especially in terms of drive and vision, in a firm’s early days, but eventually can be dysfunctional. I once attended a talk by Fred Smith, the founder of FedEx, and one thing that stuck with me was his admission about how even when the original founding team realized the company had grown to the point where they were over their heads, how difficult it was to relinquish day to day control to a cadre of experienced, professional managers.
Col Beausabre-
Q: I thought SpaceX, was not a public company. (?)
It would probably be better for Tesla if Musk wasn’t in charge but a large part of the stock price is the cult of personality.
Wayne, You’re right, I stand corrected. Thanks
Woodun, Totally agree,
Col Beausabre-
no problem.
Musk has hired the same law firm that defended 3 other CEO’s who did FAR more than he is accused of, and were only barred for 2 years max, not “life.”
The SEC complains that, inter alia, Musk’s statements had caused Tesla stock to rise in value, so the SEC held a press conference which caused the stock to lose value.
And of course no government employee will be punished for anonymously telling the media that DOJ had started a criminal investigation.
What a system.
“What a system.”
In the olden days, kings could kill any peasants they did not like, or sleep with their wives. We got rid of that unjust system and replaced it with a good capitalist system. Billionaires are smarter than us and should be allowed to do whatever they like. That’s what the free market is all about. That’s what freedom is all about.
— Musk has agreed to pay a $20 million dollar fine and resign as CEO.
wayne, reports I’m seeing say that he will resign as Chairman of the Board, but will remain as CEO.
In order for the performance based compensation package he negotiated with Tesla back in March to stay in effect, he must “remain either CEO or executive chairman and chief product officer”.
Kirk–
thanks for the clarification.
OM wrote: “Billionaires are smarter than us and should be allowed to do whatever they like.”
Whatever they like within limits. They still cannot kill anyone they don’t like or forcibly sleep with their wives (no Droit du seigneur) or husbands, nor may they say or do things (purposefully or accidentally) that cause people to make poor investment decisions that they otherwise would not make. The free market and freedom are all about people freely coming to mutual agreements, not bullied, intimidated, or fooled. Smart people are equal to the less smart people, in a free system, and the less smart people have the same rights to do whatever they can afford, too.
For instance, if a rich Japanese clothier wishes to be the first to fly on another rich man’s rocket’s flight around the Moon, whether or not it is smart to do so, then they should be free to agree to it.