Tesla’s CEO Elon Musk to Step Down as Chairman But Says “Ignore the Distractions”

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It’s been a very eventful past few days for electric vehicle maker Tesla.

Tesla’s CEO Elon Musk had been sued by the Securities and Exchange Commission for fraud with the SEC’s complaint alleging that Musk had issued “false and misleading” statements and failed to properly notify regulators of material company events.

The SEC’s complaint read:

Musk knew that he (1) had not agreed upon any terms for a going-private transaction with the Fund or any other funding source; (2) had no further substantive communications with representatives of the Fund beyond their 30 to 45 minute meeting on July 31; (3) had never discussed a going-private transaction at a share price of $420 with any potential funding source; (4) had not contacted any additional potential strategic investors to assess their interest in participating in a going-private transaction; (5) had not contacted existing Tesla shareholders to assess their interest in remaining invested in Tesla as a private company; (6) had not formally retained any legal or financial advisors to assist with a going-private transaction; (7) had not determined whether retail investors could remain invested in Tesla as a private company; (8) had not determined whether there were restrictions on illiquid holdings by Tesla’s institutional investors; and (9) had not determined what regulatory approvals would be required or whether they could be satisfied.
Over the weekend the SEC had settled charges with Musk with the CEO having to pay $20 million in a fine. Tesla will have to do the same. Musk will also have to resign as chairman from the company’s board for at least three years.

“The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders,” explained Steven Peikin, co-director of the SEC’s Enforcement Division.

Musk had written two emails to employees, both obtained by CNBC, where he tells the staff to “ignore the distractions” and that Tesla is close to “proving naysayers wrong.”

On Friday, September 28th, Musk wrote. “Ignore all distractions. One more hardcore weekend and we will all be victorious. Thanks for being amazing.”

On Sunday, September 30th, he wrote, “We are very close to achieving profitability and proving the naysayers wrong, but to be certain, we must execute really well tomorrow (Sunday). If we go all out tomorrow, we will achieve an epic victory beyond all expectations. Go Tesla!! Thanks for all your hard work.”

Tesla is expected to report third quarter production numbers this week.

Disclaimer: We have no position in Tesla Inc. (NASDAQ: TSLA) and have not been compensated for this article.