Recently, Securities and Exchange Commission filed a lawsuit against Chairman of Tesla, Elon Musk, for committing security frauds. S.E.C. regulators were planning for liberal settlement which would allow Musk to leave the position of chairman for two years, and he could remain as chief executive; also charged with a fine of $20 Million. Due to the risk of losing Elon Musk as a chairman, Tesla board resisted the S.E.C. regulators by issuing a challenging statement that the Tesla board is completely confident in the Chairman of Tesla.
According To CNBC, a professor at Yale School of Management, Jeffrey Sonnenfeld said, that Tesla has been using Jim Jones-Jonestown suicide plan by drinking the Kool-aid of Elon Musk.
After the decision by S.E.C., Musk discussed with the directors providing them a choice to let him continue as a chairman of Tesla by demanding the complete confidentiality regarding the internal settlement of the company, and praise about his integrity by the board publicly. The board members accepted all his demands, as he is currently the main asset of Tesla.
Later, Tesla lawyers went to S.E.C. fawning for a second chance, as Musk was not willing to go with this settlement. After the rejection of the settlement by Musk and efforts by S.E.C. to step down Musk from the chairman position, the stock price of Tesla fell down by almost 14%.
On September 29, 2018; Tesla board and Musk decided to settle the matter arose through the tweet by Musk. Initially, Musk had neither accepted nor denied the settlement. Noticing his 48 Hours of stubbornness even after the favorable settlement, S.E.C. felt to monitor over the Musk’s actions and increased the duration over Musk’s ban as a chairman for three years. Along with Musk, The company will also have to pay a separate fine of $20 Million.
Not only this, S.E.C. wants the company to include two independent directors, out of which one will be elected as the chairman of Tesla.
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