Yesterday’s end-of-day fraud lawsuit filed against Tesla CEO Elon Musk by the Securities and Exchange Commission needn’t have happened, CNBC reports. The CEO and founder turned down a settlement deal that would have seen him pay a “nominal” fine and remove himself as chairman, sources claim. Instead, Musk did what he does best. He went his own way, greatly increasing risk both to himself and his company.
Still, Tesla’s board stands by its man, releasing a statement late Thursday to this effect. According to Bob Lutz, outspoken industry titan, the board should have told Musk to hit the bricks.
Had Musk signed on to the settlement, he wouldn’t have had to admit guilt for tweeting “funding secured” on August 7th, part of an ultimately ill-fated attempt to take Tesla private. The settlement would, however, have kept Musk from the chairman’s position for two years, while compelling the automaker to hire two independent directors.
“This unjustified action by the SEC leaves me deeply saddened and disappointed,” Musk said to CNBC. “I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”
Says the man who accused a British rescuer he’s never met a “pedo” on Twitter, apologized, then called him a “child rapist” and dared him to sue, eventually getting his wish. It’s hard to ignore recent controversies at times like this, and Musk’s tendency for spur-of-the-moment social media bozo eruptions certainly doesn’t help his case.
In its lawsuit, the SEC claims Musk mislead investors and failed to inform the Nasdaq when he tweeted, in the middle of a trading day, his plan to take Tesla private at $420 a share. Yes, it turns out that is a drug reference. Interest expressed by Saudi Arabia’s sovereign wealth fund apparently led Musk to believe the money would be there when he needed it. That potential funding wasn’t as secured as the CEO claimed. Musk abandoned the go-private bid on August 24th.
In a statement, Tesla’s board wrote,”Tesla and the board of directors are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful U.S. auto company in over a century. Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees.”
Feel free to discuss that awkward “over a century” line.
Should a judge rule in the SEC’s favor, Musk won’t just be gone from the chairman’s seat. The agency wants Musk barred from serving as the director of a public company. Tesla’s stock dropped more than 11 percent in early Friday trading.
If it was left up to Bob Lutz, Tesla’s board would thank Musk, then tell him to step down. The company is a “disastrous mess,” Lutz said while appearing on CNBC.
[Image: Tesla]
I think the board omitted “new” “which has resulted in the most successful NEW U.S. auto company in over a century”
Given his long history of war against those shorting the stock he should have taken the generous deal. He cannot claim ignorance as to attempting to impact the price of the stock. The stock class action settlements will be in the multi-millions. Insured losses?
it just amazes me that his “war on the shorts” keeps giving the shorts what they want.
“war on the shorts” is actually code for “take it in the shorts.”
Even inserting the word “new” doesn’t help. Nearly every existing car manufacturer today was new within the last 100 years. And the majority of them are arguably more successful than a company that has yet to turn a profit.
Never mind the new or ‘in a century’, how does successful equate into that comment since it’s yet to turn a profit ever.
I’d say having launched your fourth vehicle and having sold almost 200,000 cars to date can be considered a success.
@JimZ, call it a success, I don’t know. I guess it depends on which side of the shareholder bandwagon you currently sit on.
I really don’t have a clue, I have been watching the mall where they’ve been stacking up automobiles, and it looks to have doubled in the last week. “We don’t have enough delivery trailers so we’re building them ourselves” is one of the most ridiculous things I’ve read recently from Tesla.
One analyst described the “Elon effect” as $130/ share baked into the price of the stock. Now most rational investors probably understand why the exodus of financial executives departed recently.
At $1.533 million per board member in compensation, no wonder why they have acted like fools with respect to corporate governance. They’re still wiping up the Solar City mess (even using some of them as the “Volunteer Army” to deliver cars), and they can’t even absorb the amount of solar cells that the NY Gigafactory is producing.
“@JimZ, call it a success, I don’t know. I guess it depends on which side of the shareholder bandwagon you currently sit on.”
neither side, I’m not in the game at all.
Honestly, when defining his level of success, I like to think of the product. Even his enemies admit his cars are amazing. There’s no question he has a fanatical fan base of people who just love the cars. And he has managed to survive. Surviving in such a tough, competitive market seems like a significant success.
He always said that what he really wanted was to convince the big boys to make electric cars. He succeeded in that, too. Every manufacturer has an electric car now, and it’s because he led the way and showed that it could be done, and by making great cars, not undriveable garbage. Remember what passed for electric cars when he exploded on the scene? Glorified 25mph golf carts.
So if success is making a dent in the universe, as Apple’s Steve Jobs used to say, I’d say he did it.
Glorified 25mph golf carts? Are you forgetting the electric cars that GM built then turned around and destroyed them all after about 5 years. If GM hadn’t screwed that up they would have been king of the hill. Also the Chevy Bolt has a longer range than the Model 3 of the same price. Don’t get me wrong I wouldn’t mind a Tesla but there are far to many negatives so far, especially when with Teslas in Canada. You’re a little off on your comment. Remember also the bolt gets a higher safety rating than the Model 3.
200,00 cars over 15 years . I don’t think so.
With seemingly most of Tesla’s upper-management except Musk leaving in recent months, is there anyone left to take over if Musk would step down? Furthermore, did all the talent leave because of Musk? On the other hand, Musk’s PT Barnum act is probably the only thing that has kept the company going this long, and it seems most Tesla fanbois are more enthusiastic about Musk than they are about the company, so how long could they go without him?
“is there anyone left to take over if Musk would step down?”
There is a whole police lineup of recently-unemployed German auto executives available. In fact, I think they would jump at the chance of running a carmaker that doesn’t make a single diesel engine.
“According to Bob Lutz, outspoken industry titan, the board should have told Musk to hit the bricks.” That’s what a rational company would do. However the Muskovites see him as the 2nd coming of Steve Jobs. Tesla without Musk leading the cult is a scary proposition. A large percentage of the success Tesla enjoys is a fervent belief in Musk. Period. Otherwise it’s just a slightly more establish silicon valley startup.
“Tesla without Musk leading the cult is a scary proposition.”
On the contrary, I believe Tesla would thrive without him, his micromanagement, and his mercurial ways. They could finally let the experts they’ve hired make some good decisions.
I agree with you if it was a rational company based on sound management decisions. They would NEVER be trading as high as they were trading at though without Musk- nor would they have fallen as fast as a percentage. It may be a much better company without him, but without the energy and buzz.
As they used to say, there is no such thing as bad publicity.
It’s a perennial question in start-ups – when should the visionary founder surrender the reins?
Henry Ford made Ford Motor Company a success, but clearly outstayed his best-by date. But, at the time, who was going to tell the guy who controls the company that it’s time for him to leave?
We now think of Steve Jobs as a visionary leader, but it is beyond doubt that in his first stint at Apple he brought the company to the verge of bankruptcy (ironically, Apple was saved by Microsoft).
Are there professional managers in Tesla who could carry the company into profitability? I don’t know. What I do know is that egotistic leaders tend to hire people who will echo their voice, not trumpet independent views.
And by the way, Steph, the past tense of “mislead” is “misled”. Basic English.
MrIcky
I agree that’s how the TrueBelievers look at him.
However, we must remind them that Jobs wasn’t burning through taxpayer and others money.
Did St. Elmo really say he acts with “truth and transparency”?
Funniest thing I read in a long time…
How does an unprofitable company saddled with crushing debt raise $6B in new capital over the next twelve months? Hell if I know.
If only there was a way for Elon to drive the price of the stocks down.
The Tesla Death Watch was premature, but not inaccurate. Never forget that the company’s birth was midwifed by your tax dollars.
@JimZ, completely understand if you are not on the short or the long side of the stock. It’s a precarious position to be in, because the fanboys absolutely love everything he’s done, and the shorts feel as though SEC actions are needed because of the silly tweets. You said:
“neither side, I’m not in the game at all”, but then in another post you say:
“I’d say having launched your fourth vehicle and having sold almost 200,000 cars to date can be considered a success.”
Now that is certainly an arguable position, because it took Tesla a heck of a long time to reach that goal. Maybe you are ambivalent, but over 11 years, I wouldn’t consider that some huge leap in auto manufacturing.
If EM’s true goal, as he has previously stated, to change the world regarding EVs, then why in the heck does he keep pulling a Barney Fife and shooting himself in the foot? He backs out of a SEC settlement, instead opens the door for more shareholder lawsuits, I don’t see how his statement of:
“I have always taken action in the best interests of truth, transparency and investors.” bears that out.
He’s also claimed that he was out to “burn the shorts”, that’s not in the greater good, and everyone has seen his “battery hell, production hell, paint shop hell, delivery hell”, who knows what hell is around the corner.
I totally agree with you.
“why in the heck does he keep pulling a Barney Fife and shooting himself in the foot?”
Pride.
They’ve settled. Apparently, he’s going to step down as chairman of the board and can’t run again for 3 years. He can remain CEO. He has to pay a $20 million fine.
5 Years from now:
The new Tesla S…Available at your Lincoln Motor Car Store or Cadillac dealer.