New details are emerging about Elon Musk’s showdown with the Securities and Exchange Commission (SEC) as a bombshell report from The New York Times claims the executive threatened to quit if Tesla’s board pushed him to accept a settlement.
As you may recall, Musk and the SEC were prepared to settle their dispute over his “funding secured” tweet. However, at the last minute, Musk’s lawyer reportedly called the SEC and told them that his client was no longer interested in settling.
This pushed the SEC to sue Musk for securities fraud as the agency alleged “Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source.” The SEC’s lawsuit also said Musk made a “series of additional materially false and misleading statements” about taking Tesla private and his actions “caused significant confusion and disruption in the market.”
Getting back to today’s story, The New York Times says Musk demand that Tesla fight the SEC complaint and company’s board “publicly extol his integrity.” This likely explains why Tesla’s board of directors released a statement saying they’re “fully confident in Elon, his integrity, and his leadership of the company.”
While Musk wanted to fight the SEC, he reportedly had a change of heart when Tesla’s stock plummeted nearly 14 percent after the lawsuit was announced. However, the government was annoyed with Musk’s decision to bail on the original agreement so they doubled down on the conditions for the new settlement.
As a result, the SEC reportedly increased Musk’s fine from $10 (£7.7 / €8.7) million to $20 (£15.4 / €17.4) million. The agency also tacked a year on the ban preventing him from serving as Tesla chairman.
Speaking of that role, Tesla has 45 days from when the settlement is finalized before Musk has to resign as chairman. The company’s board reportedly hasn’t had any serious discussions on who will replace Musk, but some board members have thrown their support behind James Murdoch who is the son of Rupert Murdoch and the CEO of 21st Century Fox.