The embattled billionaire CEO settled the lawsuit and stepped down as Tesla’s chairman. “I get the feeling that the SEC wants to have more adults in the room,” said one observer.
The United States Security and Exchange Commission (SEC) is here to clear up Elon Musk’s hazy summer.
According to Fortune, in a case filed against the billionaire Tesla Inc. CEO late last week, America’s financial watchdogs claimed that Musk had misled shareholders about his plans to take the space age car company private at $420 a share. SEC officials said that Musk’s controversial tweet announcement was not true, and was instead a weed joke meant to impress his romantic partner, the pop star Grimes.
“While leading Tesla’s investors to believe he had a firm offer in hand, we allege that Musk had arrived at the price of $420 by assuming 20% premium over Tesla’s then existing share price then rounding up to $420 because of the significance of that number in marijuana culture and his belief that his girlfriend would be amused by it,” Steven Peikin, co-director of the SEC’s enforcement division, said at a press conference on Thursday.
In the weeks since Musk’s straight-faced social media Cheech & Chong bit in August, the Tesla honcho has only stoked the flames about his juvenile relationship with the sweet leaf. On an impromptu appearance on the Joe Rogan Experience podcast, Musk took a hit off of a blunt, made a few funny faces, secured his reputation as a novice smoker, and instantly became a meme.
“I got text messages from friends asking, ‘What the hell are you doing smoking weed?’” Musk told Rogan on air before the interview was even over.
And apparently, his friends had good reason to worry. In the lawsuit filed on Thursday, SEC officials said that Musk’s misleading of shareholders and erratic behavior warranted removing Musk from both his role as CEO and chairman of the board.
Not willing to go to court or draw out a lengthy legal battle, Musk and his legal team settled the lawsuit with the federal agency over the weekend, with Musk agreeing to remove himself from the board of directors within 45 days, but refusing to step down as CEO. In addition to the loss of his chairman title, Musk will undergo increased oversight of all of his business communications, including e-mails, corporate memos, and even his Twitter page.
“I get the feeling that the SEC wants to have more adults in the room,” Peter Henning, a law professor at Wayne State University, told the New York Times.
For Wall Street, the knowledge that Musk would not be tied up in a lengthy legal snare by the SEC was enough to strengthen Tesla stock, which had taken a 14% hit by the time the market closed on Friday. In pre-market trading statistics reported by CNN this morning, Tesla stock jumped 18%, back to it’s pre-SEC lawsuit standing.
As for whether the federal intervention will actually change Musk’s attitude and actions, that is yet to be seen. But in a company-wide email sent in the wee hours of Sunday morning and published by the New York Times, Musk encouraged all Tesla workers to put in extra weekend hours to push the company towards profitability.
“One more day of going super hardcore and victory is ours!!” he wrote. “We are very close to achieving profitability and proving the naysayers wrong, but, to be certain, we must execute really well tomorrow (Sunday). If we go all out tomorrow, we will achieve an epic victory beyond all expectations. Go Tesla!!!”
Maybe Musk’s ideas about standard office protocol could still use a couple tune-ups.
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