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Elon Musk Will Resign As Tesla Chairman, Pay $20 Million Fine For His Social Media Tantrums

Elon Musk has agreed to pay $20 million to US financial regulator SEC for committing securities fraud last week. Elon Musk will also resign as Tesla chairman in a settlement that effectively muzzles Elon Musk online making him think twice as hard.
Indiatimes Updated on Sep 30, 2018, 08:26 IST

Think there are no consequences for your online actions? You can tweet anything with no regard and get away with it? Maybe that's true for US President Donald Trump.

But when you're Elon Musk, heading a publicly traded company like Tesla, you can't just say anything online and not have to pay for it. Oh no, sir.

Reuters

ALSO READ:?Elon Musk Is Getting Sued For Being A Fraud, And Might Be Forced Out As CEO Of Tesla And SpaceX

After being accused of committing securities fraud last week, Elon Musk has agreed to pay $20 million to US financial regulator SEC. Not only that, Elon Musk will also resign as Tesla chairman, in a settlement that effectively muzzles Elon Musk online, making him think twice as hard on what he can or cannot say in the public sphere.

It all started with that ill-fated tweet for Elon Musk, when he claimed on August 7 that he was planning to take Tesla private at $420 a share, and that he had secured funding for the same. All he needed was shareholder approval.

The US Securities and Exchange Commission -- the SEBI of America, if you will -- found Elon Musk's tweet about taking Tesla private false and in violation of strict SEC guidelines about sensitive communication related to a publicly traded company, according to a Reuters report. Since Elon Musk's tweet was completely baseless, the subsequent market chaos hurt investors and the overall shareholder value of Tesla, claimed the SEC.

In a quick settlement, Elon Musk agreed to resign as chairman of Tesla, and pay $20 million as fine for his reckless comments online. Tesla Inc -- the company -- will pay an additional $20 million as part of the fraud settlement as well.

Reuters

One thing to note though, while Elon Musk will resign as Tesla chairman, he will continue to be the CEO of Tesla, according to the fraud settlement notes. Weird how that works, but that's pretty much the only bright news in an otherwise disaster for Elon Musk personally and Tesla as a company.

Going forward, Tesla is tasked with appointing an independent chairman, two directors, and a board committee which will effectively control Elon Musk's public communications related to Tesla, under the terms of the fraud agreement approved by the SEC.

It's remarkable how Tesla shareholders revere Elon Musk, as they didn't want to completely throw him out of the company, knowing well that without Elon Musk there can be no Tesla. They just wanted to place some constraints on Musk from causing a self-inflicted wound on the company's future, that's all.?

And if you look at Elon Musk's recent online comments, where he was caught smoking weed on a webcast to accusing a British diver and calling him a paedophile, Musk did appear to be increasingly unhinged. In hindsight, this disaster was coming for sometime now.

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