Elon Musk Rejected SEC Settlement At Last Minute

Elon Musk Rejected SEC Settlement At Last Minute

Elon Musk Rejected SEC Settlement At Last Minute

Fox News contributor Gary Kaltbaum weighs in on the SEC's lawsuit against Tesla CEO Elon Musk, who they accused of making "false and misleading" statements about taking the company private.

Tesla Inc's (TSLA.O) Elon Musk could settle with US regulators who have sued to remove him from the electric carmaker's leadership, but he is prepared to fight the securities fraud lawsuit against him in court, sources said on Friday as shares plunged about 14 percent. Many have sent out an ill-advised tweet at least once in their lives, but Musk's joke about taking Tesla private at $420 a share could get him removed from the company.

Incidentally, Musk in a blog post earlier this month said that Tesla is "about to have the most incredible quarter in our history, building and delivering more than twice as many cars as we did last quarter". Musk has blamed short-sellers, investors betting on a collapse in a company's share price, for Tesla's woes.

Elon Musk is being sued by the SEC for securities violations, but it appears this entire situation could have been avoided on two distinct opportunities.

The SEC's lawsuit, filed in Manhattan federal court, caps a tumultuous two months set in motion on 7 August when Musk told his 22 million Twitter followers that he might take Tesla private at $420 per share, with "funding secured".

Musk said in a statement that the SEC's "unjustified action" left him "deeply saddened and disappointed".

"His ego is so clearly tied to the company, so what would be best for Tesla's investors would be for him to realize the company is more important than his ego", Munster said. The company reportedly needs workers with a Tesla vehicle to share between 300 and 400 hours of driving feedback with employees working on Autopilot.

The suit, which lists Musk as the defendant and not Tesla, seeks to penalize Musk with "disgorgement, along with prejudgment interest, civil penalties, and an officer director bar against Musk, and such further relief as the Court may deem appropriate", the SEC said.

In its lawsuit, the SEC said Musk calculated the $420 price per share based on a 20 percent premium over that day's closing share price and because of the number's slang reference to marijuana.

The possibility of Tesla without its founder, visionary, and CEO, Elon Musk, rattled investors on Friday as Tesla shares dropped $42.75, or 14%, to $264.77.

Some analysts are concerned about what Musk departure could do to Tesla's stock. The company confirmed earlier this month said that the Department of Justice is carrying out its own criminal investigation.

The company has projected profitability under generally accepted accounting principles in the second half of 2018, but some analysts think it will have to raise cash in coming months. Tesla's board, which includes Musk's brother Kimbal Musk, is closely aligned with the CEO.

But the board's support will not end Tesla or Musk's bad run.

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