by Chris White
Billionaire tech guru Elon Musk agreed to step down as the chairman of Tesla after the Securities and Exchange Commission sued the electric vehicle company for fraud, according to court documents published Saturday.
Musk, who owns roughly 20 percent of the company, also agreed to pay a $20 million fine in connection with a tweet he wrote in August telling followers that he had enough funding to take Tesla private, the documents note. He neither admitted nor denied the allegations the SEC leveled against him.
The SEC has spent months probing whether Musk’s promise was designed to hurt short-sellers at the expense of new investors. Musk gets to retain his position as CEO, but the move could drastically affect the company’s structure.
He told his Twitter followers in an Aug. 7 post that he had sufficient funding to take the company out of the public domain. Reports about Musk’s tweet came shortly after a source told The Financial Times that the Saudi’s Public Investment Fund (PIF) bought share of Tesla.
The PIF’s position is worth between $1.7 billion and $2.9 billion at Tesla’s current share price. The stake makes the fund one of Tesla’s eight biggest shareholders. Musk used recent discussions with the Saudi family as the justification for the tweet.
Musk has a history of employing sketchy business techniques to support the California-based company.
He told investors in May 2016, for instance, that he expected Tesla to produce between 100,000 and 200,000 Model 3 sedans in the second half of 2017. The Silicon Valley company made a fraction of that number. Still, the company’s followers consider the CEO indispensable to the company.
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