Elon Musk vs SEC is here again. The Securities and Exchange Commission (SEC) has filed a lawsuit against Tesla CEO Elon Musk for allegedly not properly disclosing his ownership of X, formerly Twitter, as required by the US federal law, which is said to have enabled him to purchase shares of the platform at “artificially low prices”.
Incidentally, this is not the first time that Elon Musk is having a run-in at the US SEC. A recent clip shared by the account ‘Elon Clips’, that “documents Elon Musk through original video clips” has shared a Lex Fridman Podcast, dated November 9, 2023. Elon Musk too has responded to the post with a “yes”, confirming the incident.
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What Can Other Companies Learn From Musk’s Approach?
In the podcast, Elon Musk said that he had to pay a fine to the SEC to save Tesla from going bankrupt. This despite the fact that he was found not guilty by a San Francisco court. “The SEC forced me to pay a fine although I was found not guilty. “I did actually have the funding secured. There was a big trial in San Francisco, a big civil trial. The jury found me not guilty. Unanimous finding of a San Francisco jury. The reason I agreed to the fine for the SEC is not because the SEC was correct. That was extremely bad behavior by the SEC. Corruption, frankly. But if I did not agree to pay the fine, Tesla would have gone bankrupt immediately. I was told by our CFO that the banks would immediately suspend our lines of credit. If they suspended our lines of credit at that time, we would have gone bankrupt instantly. There would never have been an opportunity for a trial, because Tesla would be dead. This is like someone holding a gun to your kid’s head and saying, pay $20 million. This is like a hostage negotiation,” said Musk in the podcast
Why Elon Musk and Tesla were fined $20 million by SEC
Tesla CEO Elon Musk had to pay $20 million in fines each by the SEC. Tesla and Elon Musk were fined $20 million each over a tweet, which was sent less than an hour before Musk tweeted that he would take a break from Twitter “for a few days,”. The tweet is said to be in response to a question from a Twitter follower. The SEC charged Musk with misleading investors with tweets on August 7 that said he was considering taking Tesla private at $420 a share and had secured funding. The tweets had no basis in fact, and the ensuing market chaos hurt investors, regulators claimed.
Tesla Inc and Elon Musk agreed to pay $20 million each to SEC and Elon Musk agreed to step down as the company’s chairman but remain as CEO, under the settlement.
