Elon Musk Reportedly Bailed On SEC Settlement At The Last Minute

The Securities and Exchange Commission (SEC) is suing Tesla CEO Elon Musk for committing securities fraud and it looks like the outspoken executive was originally going to settle with the government.

According to the Wall Street Journal, the SEC created a settlement with Musk and had gotten it approved from the agency’s commissioners. Everything was ready to go and the settlement was slated to be filed yesterday morning.

However, Musk’s lawyer reportedly called the SEC and told them that his client was no longer interested in settling. This triggered a series of events as the agency “rushed to pull together the complaint” against the CEO of Tesla. While nothing is official, this seems plausible as yesterday’s press conference appeared hastily organized and started approximately 20 minutes late.

CNBC is backing up the reporting of the Wall Street Journal and is filling in new details. In a report published earlier today, the network said the SEC agreement was a slap on the wrist as it wouldn’t force Musk to admit guilt and only required him to pay a “nominal fine.” However, the settlement had one key condition that likely torpedoed the deal – Musk would have to step down from his position as Tesla chairman for two years and the company would have to appoint two new independent directors.

Sources told the publication that Musk refused to settle because he “felt that by settling he would not be truthful to himself, and he wouldn’t have been able to live with the idea that he agreed to accept a settlement and any blemish associated with that.”

It remains to be seen if Musk made a wise move, but the SEC is now seeking a “permanent injunction disgorgement, civil penalties, and a bar prohibiting Musk from serving as an officer or director of a public company.” The agency says this is necessary because Musk made a series of false and misleading statements about taking the company private and having secured funding to do so. Despite tweeting this, the SEC’s lawsuit says “Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source.”

Musk has called the lawsuit “unjustified” and Tesla’s board of directors has said they’re “fully confident in Elon, his integrity, and his leadership of the company.”

While Tesla’s board might be behind Musk, investors aren’t happy as the lawsuit has caused the company’s stock price to plummet. When this article was written, the stock price was $268.69 per share which is a 12.63% drop from yesterday.

  • Mr. EP9

    Would have been a lot easier on Elon’s end. Oh, well. Let’s see what happens next. I don’t expect it to be pretty.

    • Bo Hanan

      A work colleague of mine thinks Elon would make a great Bond Villain. I agree.

  • Hate to say it, Tesla without Musk is not Tesla anymore. Just look what happened to Apple after Musk died.

    • Matthew Daraei

      You mean after Jobs died, right?

    • Jay

      I agree, however I feel that it’s almost always that way. Usually when there’s a new CEO the company changes a bit. Sometimes for the worse and others for the better.

    • Ilbirs

      Maybe it’s time for Tesla to put some decisions on the hands of a board of directors and some other business people, freeing Elon Musk to imagine the kind of crazy stuff we expect from him but with people to make them viable. This structure works in some innovative companies.

      • True. However, creative and imaginative people like Elon usually cannot let their “baby” go. Steve Jobs left Apple, came back and saved it from bankruptcy with Microsoft’s help, and made it better.

    • Ken Lyns

      …Apple exceeded $1 trillion valuation?

      • Yeah, so is Amazon and MSFT is close behind. If Jobs was still there Apple would probably be close to $2 Trillion.

  • Dude

    It’s stopped falling but isn’t rising. I really want to buy some stock because it pretty much always rebounds after a dip like this but it’s probably won’t be a safe buy until the investigation ends.

  • Perry F. Bruns

    I want Tesla to succeed for the same reason I wanted AMC, Lamborghini, Tucker (though a bit before my time), DeLorean, and even Bricklin to succeed: They aren’t the Big Guys. Sure, some (often most) of their ideas products are a little out there, or even completely warped–but sometimes the only thing keeping an odd idea from being a great product is a test drive.

    That said, it’s looking more and more like Elon Musk is destined to join the ranks of the also-rans, those who came up to the wall of natural and artificial barriers to competition, got a running start, tried to pole vault over, and instead slammed into it at top speed.

  • Dennis James

    His tweet was a stupid and childish thing to do, but I’m not sure it qualifies as what SEC is saying. Look what others are tweeting and getting away with 🙂 Looks to me that Elon Musk is pissing off a lot of people that would not want electric cars to succeed. However, Tesla showed the world that viable alternatives exist. But Elon Musk needs to lead Tesla for at least 5 more years to reach the point of no return for electric transportation.

  • Ken Lyns

    Waiting for TSLA to hit $199 a share so I could start buying…

  • gambit gamboa

    Yeah, a fight with the SEC? Then FBI next I gather, turning out to be like Wolf of Wall street when Leonardo Dicaprio didnt want to step down. Killed by his own arrogance, how fitting.

  • LouInPA

    You should update this article… SEC and Tesla settled and they recovered stock price.

Chevy’s ‘Vehicle Locate’ Feature Can Put Everyone’s Mind At Ease

Vehicle Locate can help you keep tabs on your car and let people know where you are.

Netflix’s New F1 Series Promises A Proper Behind-The-Scenes Look

‘Formula 1: Drive to Survive’ Netflix docuseries will span 10 episodes and debut on March 8.

There Are 9,000 New C7 Corvettes Sitting At Dealers’ Lots – Who Wants One?

News of the mid-engined C8 Corvette have slowed C7 sales considerably, but it still is one heck of a sports car.

How Badly Should Britain’s Car Industry Fear A No-Deal Brexit?

The disruption caused by a no-deal Brexit could result in the decline of the UK’s car industry.

1964 Ford Falcon Goes From Boring To Mad Max With Hot Rod Mod

This second-generation Ford Falcon has been lowered and modded to look more menacing.

Fiat 500L Urbana Edition Launched Stateside As $595 Styling Pack

The 500L Urbana is a styling pack available for the Trekking, to which it adds a $595 premium.

Volvo’s Made In The U.S.A. S60 Coming To Europe

Volvo expects to produce nearly 50,000 vehicles in the US, half of which will be exports.

Montblanc Luggage Set For BMW 8-Series Costs More Than A Ford Fiesta

The five-piece luggage set is tailored made for the 8-Series Coupe and is priced at 14,900 euros.

Audi Slides Down A Snowy Hill Takes A Dodge With It

This Audi A4 Avant driver might want to put some chains on the car next time.

GM Putting $20 Million Into Romulus Plant To Build More 10-Speed Transmissions

This can only mean more GM vehicles will feature 10-speed auto transmissions in the future.