SEC's $20m fine over 'funding secured' tweets were 'worth it', says Elon Musk
Musk tweets his way back into trouble over the weekend
Elon Musk has declared that his series of tweets over taking car maker Tesla private, which resulted in an investigation by the US stock market regulator, the Securities and Exchange Commission (SEC), culminating in a fine of $20 million for both him and the company were "worth it".
Musk was responding to a question posed to him by a Twitter follower - with Musk declaring that he was going to take a break from Twitter just an hour later. However, investors may be concerned over Musk's attitude and whether the company has made much progress on appointing a new chairman to rein-in Musk's impulses.
Under the terms of the settlement between Musk, Tesla and the SEC, Tesla needs to appoint an independent chairman by 13 November - just two weeks time - as well as two new independent directors. Musk may also have to give up his personal Twitter account, or at the very least pledge to stop using it in connection with Tesla.
Musk's "funding secured" tweets were made on 7 August, and claimed that he was planning to take Tesla private at a price of $420 per share - a premium of just over 20 per cent of the company's stock price at the time. His tweets implied that the only remaining barrier to the privatisation would be a shareholder vote.
"The SEC's complaint alleged that, in truth, Musk knew that the potential transaction was uncertain and subject to numerous contingencies. Musk had not discussed specific deal terms, including price, with any potential financing partners, and his statements about the possible transaction lacked an adequate basis in fact," the SEC claims.
In the immediate aftermath of Musk's "funding secured" tweet, Tesla stock rose by six per cent, burning short-sellers who had bet on the company's stock price falling due to Model 3 production difficulties. The SEC claims that Musk's actions caused "significant market disruption".
However, when it became clear that funding was far from secured, Tesla's stock priced plunged, and continued to fall throughout most of the quarter - until the company posted an unexpected profit last week.
The SEC investigation and fine isn't the end of the matter, though, with private investors - many of them short sellers burned by Musk's tweets - also suing the company and Musk over the August privatisation claims.
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