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The SEC-Elon Musk-Tesla Settlement Does Not Meaningfully Punish Mr. Musk or the Board or Protect Shareholders

FOR IMMEDIATE RELEASE
Monday, October 1, 2018
Contact: Nick Jacobs, 202-618-6430 or njacobs@bettermarkets.com

 

Washington, D.C. – Following the settlement between Tesla CEO Elon Musk and the Securities and Exchange Commission, Dennis Kelleher, president and CEO of Better Markets, issued this statement:

“The SEC settlement with Tesla and its CEO is a meaningless slap on the wrist.  A $20 million fine is puny to a person like Mr. Musk who is reportedly worth about $20 billion dollars.  It is also grossly insufficient given Mr. Musk’s allegedly fraudulent tweet caused Tesla’s stock to rocket up and then crash causing hundreds of millions if not billions of dollars in damages to investors.   

“The SEC-required management changes are less than the Board of Directors should have done on their own a long time ago.  This Board failed in its most basic duties to protect investors and the company from a CEO and Chairman who clearly needed supervision and controls.  While it’s good that the SEC has now required them to do that, where is the rigorous SEC investigation into the Board’s apparent dereliction of duty?

“Moreover, how could the SEC think Mr. Musk was such a danger to investors that it sued him seeking to bar him from being a director or officer of a public company on Friday, but on Monday settled for a tiny fine and a little increased Board supervision?  Given that such a bar is one of the most serious and draconian punishments that the SEC can employ, this dramatic and unexplained change in penalties must be clarified.

“CEO and Board failures like this and worse are going to continue, and investors are going to continue to suffer serious harm, until the SEC starts meaningfully punishing wrongdoers by substantial fines, bars and other penalties.  This case was a softball across the middle of the plate and the SEC whiffed.  Investors expect and need the SEC to do better.”

 

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.

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