Elon Musk fined $20million and must resign as chairman following fraud charges

Randal Sanchez
September 30, 2018

U.S. carmaker Tesla has agreed to pay a $US40 million ($A55.37m) fine and have founder Elon Musk step down as chairman for misleading tweets about stock prices. "Shareholders could either to sell at 420 or hold shares & go private", he wrote in a follow-up tweet.

The deal comes just two days after the SEC filed a lawsuit against Musk for fraud and misleading investor investors about a buyout of the popular electric auto company when he tweeted "Am considering taking Tesla private at $420".

Musk - who will remain CEO of Tesla - will be ineligible to serve as chairman of the board for a period of three years and will be replaced by an "independent chairman", while two "independent directors" will also be appointed by Tesla, the SEC said. Neither Musk nor Tesla are admitting any wrongdoing.

"In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source", the regulator said. He went on to say, "The resolution is meant to prevent further market disruption and harm to Tesla's shareholders".

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Musk has not tweeted about the SEC settlement.

Tesla said in 2013 that it would use Musk's Twitter account to announce "material information about Tesla", but the company didn't really have any rules for how that might work or comply with SEC rules. Musk will also be forced to step down from his position of as Tesla Chairman. The SEC charged Tesla with failing to have required disclosure controls and procedures for Musk's tweets.

The SEC said those claims were "false and misleading".

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