Tesla, CEO Elon Musk settle SEC fraud case for $40M

Sean Reid
September 30, 2018

Millionaire Elon Musk has been fined $20million and must resign as the chairman of Tesla following a settlement on fraud charges.

Both he and Tesla will also have to pay a $20m (£15m) fine.

The deal comes just two days after the SEC filed a lawsuit against Musk for fraud and misleading investor investors about a buyout of the popular electric vehicle company when he tweeted "Am considering taking Tesla private at $420".

Things could ultimately have been significantly worse for Musk, as the SEC had sought to bar him from serving as an officer or board member of a publicly traded company.

In related news, SEC also charged Tesla with "failing to have required disclosure controls and procedures relating to Musk's tweets". The SEC said the company had no way to determine if his tweets contained information that must be disclosed in corporate filings, or if they contained complete and accurate information.

Musk has not tweeted about the SEC settlement.

'The resolution is meant to prevent further market disruption and harm to Tesla's shareholders'.

According to the SEC statement, neither Musk nor Tesla admit any wrongdoing.

"The total package of remedies and relief announced today are specifically created to address the misconduct at issue by strengthening Tesla's corporate governance and oversight in order to protect investors", Stephanie Avakian, co-director of the SEC's Enforcement Division, said in a statement. After that period, Musk could presumably be re-elected as Tesla chairman.

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