Market watchdog to push Elon Musk out of director’s chair
The American stock market watchdog, SEC (Securities and Exchange Commission), has decided on Thursday to pursue Elon Musk before court for fraud after announcing his intentions to take Tesla private. They want him to be forbidden any longer to run a public company as CEO.
Musk reacted immediately saying the SEC’s action is doing him an injustice and has disappointed him deeply. “I have always acted in the best interest of investors, truth and transparency. Integrity is the most important value in my life and I’ve never compromised it in any way”, Musk said.
420 dollar per share
Facts relate to a tweet Musk launched on August 7th saying he was considering taking Tesla private at 420 dollar a share and that funding was secured. By doing that, Tesla wouldn’t be bound anymore to strict regulations about transparency, like making company results public every quarter.
In no time shares soared to 379,57 dollar. A few days later Musk explained he assumed that the Saudi’s Public Investment Fund (PIF) was prepared to finance the operation for a large part after earlier contacts, which turned out not to be so ‘solid’ as he thought, and Musk had to cancel the whole operation.
“The declarations of Mr Musk have deceived investors, making them believe he was quite certain he could take Tesla private at 420 dollar per share”, Stephanie Avakian from SEC said at the press conference.
“In reality at the time of these declarations, Mr Musk, hadn’t secured funding […]. On the contrary […], he even hadn’t discussed the most important part of the transaction – the price – with whatever possible source for financing.”
Stock exchange fraud
So the SEC wants Justice to confirm Musk is guilty of ‘stock exchange fraud’ and apart from fining him and confiscating all profits made by this, deny Elon Musk the right to lead a company quoted on the stock exchange any longer.
The stock market watchdog added that at the time of Musk’s tweet, 22 million people including lots of journalists who spread the news further, were following him. “Neither his celebrity, nor his reputation being a technological innovator give him the right to break the rules”, Avakian said.
‘Worst is yet to come’
This famous tweet yielded the plagued Tesla CEO already a juridical action from shorters losing money by it and an investigation started by the Department of Justice itself. In a remarkably open, sometimes emotional, one-hour-long phone conversation with New York Times columnist, David Gelles, later in August, Elon Musk admitted the last year to be “the most painful in his career”.
“For Tesla the worst is over”, added the CEO, who said to have been working 120 hours a week and needing sleeping pills to get some rest, “but for me personally it’s yet to come.” That declaration might be visionary too.