In a newly-released statement, the United States Securities and Exchange Commission has announced that in a new settlement reached after the commission sued Elon Musk for misleading Tesla shareholders, the tech magnate will have to step down as Tesla's chairman of the board of diorecors.
The lawsuit in question all come from a "misleading" tweet in which Musk asserted that he received enough funding to take Tesla private at $420 a share. Stocks soon rose more than 10 percent afterwards. But, it would soon be revealed that the funding he mentioned never existed in the first place. He recanted his claim and announced that Tesla would remain public soon after.
According to the United States' SEC, it was a big no-no and Musk was subsequently accused of securities fraud:
"Musk knew that the potential transaction was uncertain and subject to numerous contingencies," the SEC writes in their press release. "Musk had not discussed specific deal terms, including price, with any potential financing partners, and his statements about the possible transaction lacked an adequate basis in fact. According to the SEC’s complaint, Musk’s misleading tweets caused Tesla’s stock price to jump by over six percent on August 7, and led to significant market disruption."
Now, all charges have been settled but not without significant punishment. The SEC revelas that Musk will have to step down as chairman and will be ineligible to be re-elected for another three years. Additonally, both Musk and Tesla will have to pay a $20 million penalty each, with the total $40 million being distributed to "harmed investors under a cout-aproved process."
“The total package of remedies and relief announced today are specifically designed to address the misconduct at issue by strengthening Tesla’s corporate governance and oversight in order to protect investors,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division.