Tesla founder Elon Musk will pay $20 million to the Securities and Exchange Commission (SEC) and step down as the company’s chairman but remain as chief executive.
The news comes after after the SEC sued Musk and the company for securities fraud.
Tesla will also have to pay $20 million, under the settlement.
The SEC alleged that Musk issued “false and misleading” statements and failed to properly notify regulators of material company events.
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Earlier this year Musk confirmed Tesla would stay a public company after widespread market speculation over the future of one of his main entities.
On August 7, Musk tweeted that he was “considering taking Tesla private,” sparking speculation over the potential implications of what would be the biggest corporate buyout in history.
Market watchers met the announcement with suspicion, due to the amount of capital such a move would require. A buyout of the electric car and solar power company at Musk’s proposed $420 per share is estimated to require $72 billion.
However, Musk said on August 25 that the company would remain public.
“We fully support Elon as he continues to lead the company moving forward,” Tesla’s board said then in a statement.
Tesla’s board released a statement on August 14, saying they have established a committee and retained a legal team to explore options for taking the company private.
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What are the implications?
- Musk said business would be “smoother and less disruptive” as a private company.
- In a letter to employees, he said it would end “end the incentive to attack the company” caused by traders shorting its stock. Musk says Tesla’s is the stock most heavily bet against (shorted) by share traders in history.
- The move would mean members of the public could not invest in its stock, making the company more independent, and private owners less accountable.
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