Elon Musk has agreed to step down as chairman of Tesla and pay a $20 million fine in order to avoid being charged with fraud according to CNN.
He will remain as CEO.
Tesla meanwhile will also pay another $20 million. The combined $40 million will be distributed amongst harmed investors under a court approved process.
Musk was threatened with a fraud charge after he tweeted that he was planning to take Tesla private for $420.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
While this was likely intended as a joke, 420 being a dagga reference, the US Security and Exchange Commission weren’t laughing.
$420 per share was a serious premium on what the shares were worth at the time.
According to Esquire they announced that they were suing the billionaire for fraud over his ‘false and misleading’ tweets, as he had manipulated the market.
This isn’t the first time a tweet by Musk has actually violated the law. First a bit of background:
Jose Moran, a factory worker at Tesla posted on Medium in 2017 about how Tesla employees have to work longer hours for less pay at Tesla than at other auto manfacturers, he was calling for the company’s workers to unionise.
According to The Verge, Tesla has even been accused of breaking federal laws to restrict labour’s ability to organise and retaliate against pro-union workers.
One of the things the Verge mentioned was this tweet:
Nothing stopping Tesla team at our car plant from voting union. Could do so tmrw if they wanted. But why pay union dues & give up stock options for nothing? Our safety record is 2X better than when plant was UAW & everybody already gets healthcare.
— Elon Musk (@elonmusk) May 21, 2018
Here’s the thing – that’s illegal according to the National Labour Relations Board.
It was apparently “interfering with, restraining, and coercing employees” involved in union activity protected under the law reports Jalopnik.
The Guardian reported in May of 2017, that ambulances have been called more than 100 times since the company started in 2014, because the workers were suffering fainting spells, dizziness, seizures, abnormal breathing and chest pains.
There were hundreds more for workplace injuries and ‘other medical issues’.
Musk has been the CEO of Tesla for three years. According to that same Guardian report, during that time it’s value has grown to exceed Ford and, at least briefly, General Motors.
Only one issue with that, according to Tesla’s second quarterly financial update for 2018, they hope that by producing “7,000 vehicles per week, or 350,000 per year” they can hopefully become profitable for the first time ever.
In words, they’re huge without ever having made a profit.
I know it is not a popular opinion, but I am not a fan of chairmen who treat their workers badly, and its even worse when they do that and still don’t make profits.
I for one am not going to be moaning “alas poor billionaire” over this.
- Correction: Musk is resigning as chairman – original story said CEO.
- Picture courtesy of Blomst on Pixabay.