Elon Musk Rejected Tesla SEC Settlement at Last Minute

Elon Musk Rejected Tesla SEC Settlement at Last Minute

Elon Musk Rejected Tesla SEC Settlement at Last Minute

Investors dumped stock in the electric auto maker after Musk was accused by U.S. authorities of falsely claiming in a tweet that he had secured funding to take the firm private. Ultimately, Musk took the blame, explaining that the company relied too heavily upon automation.

"Musk knew or was reckless in not knowing that each of these statements was false and/or misleading because he did not have an adequate basis in fact for his assertions", the SEC's lawsuit said.

The company reportedly needs workers with a Tesla vehicle to share between 300 and 400 hours of driving feedback with employees working on Autopilot.

"These things nearly always settle", Elson said.

Even without further action by another regulator, UBS says it will pose clear challenges to Tesla in the immediate future - including the possibility of a new boss. "This unjustified action by the SEC leaves me deeply saddened and disappointed", he said in a statement.

The billionaire entrepreneur said he had done nothing wrong and the company's board said it supported him.

The fraud charges originate from an August 7 tweet Musk sent about taking his publicly traded company private, which said: "Am considering taking Tesla private at $420".

There were signs of progress in the months after that, and investors cheered in June after Musk said Tesla was about to hit its goal of making 5,000 Model 3s a week.


We reached out to Tesla for comment but had not heard back at time of writing.

The SEC allege that Musk upped it to $420 because the number is code in marijuana culture referring to the consumption of the drug, and he thought his girlfriend, Canadian singer Grimes, would find it amusing. The question is whether the notoriously unpredictable chief executive officer will take the hint. Musk responded, "Yeah, that would be great". "In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source", the SEC said in the complaint filed in federal district court in the Southern District of NY. Only the shareholders' assent was needed, he said. If the agency wins, it will seek to ban him from serving as an executive of any public company, including the electric automaker he has devoted his life to for 15 years.

"The lesson for CEOs is that the rules apply to everyone including highly successful visionaries", said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.

"The SEC wouldn't delay its case for the DOJ", said Teresa Goody, CEO of law firm Goody Counsel and a former SEC attorney.

"To be clear, near-term if Tesla is able to ramp the Model 3 over the coming quarters, we believe cash flow should improve".

The lawsuit doesn't bode well for Musk and may have put his job at risk. The charges also open up Tesla to lawsuits from investors who bought and sold shares based on Musk's tweet about going private.

Tesla has recently emerged from months of what Musk called "production hell" and now finds itself in what he's said is "delivery logistics hell".

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