Elon Musk Resigns As Tesla Chairman, Agrees To Pay $20 Million In SEC Settlement Because Of A 420 Joke
Nobody has ever died from marijuana. But Elon Musk has come the closest to being killed by weed. On Saturday, Musk reached a settlement with the Securities and Exchange Commission that he would step down as Tesla’s chairman and would also pay a civil penalty of $20 million. This all stems to a tweet saying that he was taking Tesla private and including a dumb 420 joke.
“As a result of the settlement, Elon Musk will no longer be Chairman of Tesla, Tesla’s board will adopt important reforms —including an obligation to oversee Musk’s communications with investors—and both will pay financial penalties,” said Steven Peikin, who co-directs the SEC’s enforcement division.
Within the next 45 days, Musk must now depart from his role as Tesla chairman for at least three years. Musk as well as Tesla will also have to pay a penalty of $20 million, which will be distributed to investors who were affected by Elon’s tweet about taking Tesla private. Tesla will also have to install two new directors that are not linked to Musk as well as add “controls and procedures to oversee Musk’s communications.” In other words: stop him from tweeting.
Musk’s tweeting is what got him in deep shit to begin with. The SEC lawsuit stemmed from Musk’s tweet on August 7th that said he was contemplating taking Tesla private and the price would be $420. A reference to the preferred weed smoking time of 4:20.
Musk issued a statement on the Tesla website explaining how he arrived at the price of $420. The perspective price per share was based on a “20% premium over the stock price following our Q2 earnings call (which had already increased by 16%).”
The actual price was said to be $419, but Musk later revealed that he added an extra dollar to make the price $420 “because he had recently learned about the number’s significance in marijuana culture and thought his girlfriend would find it funny, which admittedly is not a great reason to pick a price.” Another person who had their life ruined by the Devil’s lettuce.
Musk will still continue in his role as Tesla CEO because the SEC did not want to add extra harm to the electric carmaker. “At the Commission, the interests of ordinary investors are at the front of our minds and, in matters involving misconduct, we seek to serve those interests to the extent practicable while also ensuring that we remediate and deter misconduct,” said SEC Chairman Jay Clayton.
The settlement is still subject to court approval. Musk remains as Tesla’s largest shareholder, with over 20 percent of the company. Another valuable lesson on the pitfalls of social media.