Should Elon Musk step down from Tesla

Musk has to step down as Tesla's board member

Shortly after the US Securities and Exchange Commission filed a lawsuit against Tesla boss Elon Musk, both sides have now reached an out-of-court settlement. An SEC release on Saturday said Musk agreed to pay a million dollar fine and step down as head of the board of directors. In addition, Tesla must establish additional control bodies. The out-of-court settlement of both sides has yet to be confirmed by a court.

According to the SEC, a dependent chairman of the board of directors will be installed in place of Musk. Musk may not be re-elected for three years, the stock exchange regulator said. In addition, Tesla must appoint two new independent directors to the board and set up a committee of independent directors that the Californian company also controls. The SEC also demands that Musk's communications be monitored in the future. The agreement also includes both Musk and Tesla to pay a fine of US $ 20 million each. The money should be distributed among the investors who were harmed in the course of a court-approved procedure, it said.

As recently as Thursday, the US Securities and Exchange Commission said it had filed a lawsuit against Musk in federal court in New York for securities fraud following a series of false and misleading tweets about the potential privatization of Tesla. Previously, an out-of-court settlement between the SEC and Musk should have failed.

Background to the story: On August 7, Musk tweeted that he was going to privatize his company for $ 420 per share, with funding already secured and the only thing missing was shareholder approval. The Securities and Exchange Commission believes that Musk had not discussed any contract details with a financial partner at the time. However, his tweet led to a surge in the stock market price and significant market disruptions, as stated in the SEC lawsuit.

With the deal, Musk can remain CEO of Tesla. According to his statements from the weekend, Tesla is said to have been “close to profitability” in the third quarter. So far, the electric car and storage manufacturer has not posted a profit in its company's history. Tesla's share price rallied sharply on Monday morning. Around noon it was up a good twelve percent at EUR 263.50 per share and thus roughly back at the level before the SEC lawsuit against Musk became known.

According to media reports from the USA, Musk has now agreed to a worse deal with the SEC. In the run-up to the lawsuit, the Securities and Exchange Commission wanted Musk to waive the post of chairman of the board of directors for only two years and pay a fine of US $ 10 million. There are also reports that the US Department of Justice is conducting its own investigation into Musk and is continuing it. These could also lead to criminal investigations against the Tesla boss.

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