Elon Musk Rejected US Securities and Exchange Commission Settlement at Last Minute

Elon Musk Rejected US Securities and Exchange Commission Settlement at Last Minute

Doubts were raised after U.S. authorities began securities fraud proceedings against the billionaire following his Twitter claims that he had secured funding to take the company private.

In a lawsuit, the regulator described Musk surprising members of his own team and investors with a series of tweets, starting with the August 7 announcement that he was thinking of taking Tesla private.

According to the Wall Street Journal, the SEC created a settlement with Musk and had gotten it approved from the agency's commissioners. However, the settlement would have barred Musk as chairman for two years and would require Tesla to appoint two new independent directors, reported CNBC's David Faber, citing sources.

The SEC on Thursday filed a lawsuit against Musk accusing him of fraud and sought to remove him from his role saying he made a series of "false and misleading" tweets about potentially taking the company private. Under the scrapped settlement, Tesla would have also faced a financial penalty, though it was lower than Musk's, the person said. As the complaint notes, he sent the tweet on a Tuesday, in the middle of the trading day, causing Tesla's stock price to jump six percent as he waved away concerns on his Twitter that what he was planning to do is basically impossible. But at the beginning of August things looked even better after Musk said production was improving and Tesla wouldn't have to raise more money, a step that could have knocked its stock price down. "This unjustified action by the SEC leaves me deeply saddened and disappointed", he said in a statement. "They want to make an example out of him".

Those legal skirmishes could ramp up pressure on the board to map out a post-Musk succession plan as questions grow over his fitness for the job.

OPEC, Russia rebuff Trump's call for immediate boost to oil output
The higher oil prices could cause problems for Trump in the lead up to the midterm congressional elections in November. If Brent prices climb past $82 a barrel, he said prices up to $90 would be a near-term possibility.

Musk has a laundry list of big, capital-intensive projects on his to-do list: to construct a factory in China, build a semi truck and Model Y crossover vehicle, deploy self-driving technology and finish developing a solar roof product. Despite this, we think the company will survive.

"Without Elon, Tesla would be a debt-laden automaker that's burning a ton of cash", said David Whiston, an analyst with Morningstar in Chicago.

There were bumps in the road, like when Musk snapped at analysts during a company conference call and when he attacked a British diver who had helped rescue children who were trapped in a cave in Thailand.

The very attributes that have fueled a mania around Elon Musk - his vision, brash personality and willingness to take risks - could prove to be his downfall.

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