United States government sues Elon Musk, may be removed as Tesla boss

Getty Images SHARE

As demonstrated by the stock's reaction, investors believe the removal of Musk from Tesla would be negative for the prospects of the company, despite his recklessness in the go-private tweets. The Tesla boss had added what he thought was a bog-standard 20 per cent premium for take privates.

As part of the settlement, Musk will step down as chairman of the board and will be replaced by an independent chairman, the SEC said.

Musk's role at Tesla is uncertain now that the SEC is seeking to bar him from serving as an officer and director of a public company, following his August tweet about having "funding secured" to take Tesla private at $420 a share. The SEC wants a court to order Musk to stop making false and misleading statements and repay any gains he made.

Winning its case against Musk would be a significant victory for the SEC, as it would send a message to other companies about the agency's ability and willingness to punish illegal activity, Gorman said. Today's ~14 percent drop was the worst day in Tesla's history since way back in 2013.

At least five research firms said Musk might have to resign following the SEC lawsuit.

In a statement to CNBC, Musk called the allegations "unjustified".

Musk, 47, is the public face of Tesla, and has driven it to the verge of profitability with a costly ramp-up of production of its Model 3 sedan over the past year.

Getty Images SHARE
Getty Images SHARE

Watch General Motors and Tesla trade here in real time.

Tesla's board, which includes Musk's brother Kimbal Musk, is closely aligned with the CEO.

"The fundamentals of Tesla have been horrendous, I don't think anybody would deny that". That's putting intense pressure on Musk and the board to stop the bleeding.

Musk has a laundry list of big, capital-intensive projects on his to-do list: to construct a factory in China, build a semi truck and Model Y crossover vehicle, deploy self-driving technology and finish developing a solar roof product.

The SEC's lawsuit could "hasten the inevitable transition of Tesla shares toward being valued based upon fundamentals alone (fundamentals which we have long held do not support a value close to the current trading price)", analyst Ryan Brinkman said in a note Friday, according to MarketWatch.

"Without Elon, Tesla would be a debt-laden automaker that's burning a ton of cash", said David Whiston, an analyst with Morningstar in Chicago. Breakingviews cleverly posits that a Musk-less Tesla will reveal the true value of the innovative but financially challenged company. "Personally, I think it would be very unsafe to do so".

On Friday, Citigroup downgraded Tesla's stock to a sell rating from neutral , citing the SEC's suit.

EPL: Arsenal's Emery speaks on starting Welbeck ahead of Lacazette, Aubameyang
The England worldwide scored twice before a late goal from Alexandre Lacazette wrapped up the victory. And following the 3-1 win, it prompted Arsenal fans to make a sly dig at Alexis Sanchez.

Related News:



Most liked

'Look at me:' Women confront key Republican senator over Kavanaugh vote
Senators Doug Jones and Richard Shelby will be part of the final vote for Judge Kavenaugh's Supreme Court nomination. "Obviously. Deborah Ramirez accused Kavanaugh of sexual misconduct while they were in college and she had been seeking an FBI investigation.

United Nations asks Venezuela to open its doors to humanitarian aid
The Venezuelan socialist said that he was ready to cast aside " dramatic differences " and give a dialog a shot. Maduro's appearance at the General Assembly took many off guard .

North Carolina Boy with Autism Is Missing: 'I Blame Myself,' Says Dad
The search for a 6-year-old boy who disappeared from a Gastonia, North Carolina, park over the weekend has entered its fourth day. Then, the grief-stricken mother reached out one more time, encouraging anyone who might have seen her son to contact authorities.

Senate GOP Hires Woman to Question Ford, Kavanaugh
Mitchell has helped train psychologists, medical professionals, forensic interviewers and detectives in sex-crimes issues. She studied law at Arizona State University, passing the bar in 1992, and since 1993 has worked as a prosecutor.

Passenger plane crash-lands in ocean in Micronesia (PHOTOS, VIDEO)
Papua New Guinea's Accident Investigation Commission said it was preparing to send investigators to the accident site. The Port-Moresby-based airline said in statement that the plane, a Boeing 737-800, " landed short of the runway ".

Marcus Rashford slammed by Jose Mourinho for incident after Young Boys win
The two players remain on good terms but club insiders have noticed they are not as close as before. That looked like the manager was handing responsibility to the players.

Everson Griffen being evaluated at hospital as Minnesota Vikings concerned about well-being
The Minnetrista Incident Report states there are no criminal charges forthcoming against Griffen since no crime was committed. KSTP-TV reported , citing unnamed sources, that Griffen was involved in a weekend disturbance at a downtown hotel.

Timberwolves' Asking Price for Jimmy Butler Is Too High
The Miami Heat's mission to trade for Minnesota Timberwolves small forward Jimmy Butler is only intensifying. According to ESPN, he wants a five-year and $190-million extension with a new team.

Yale cancels classes to allow students to protest Kavanaugh
She says the allegations are disappointing but not surprising. "I'm close, I'm very close, but I'm not all the way there yet". Collins said she hasn't decided whether she'll vote in favor of confirming Kavanaugh to the court.

New Kavanaugh accusation raises 'doubt' on eve of hearing
Ford claims that in 1982, when the two were in high school , a drunken Kavanaugh pinned her down at a party and tried to rape her. Ford claims the assault ended with Kavanaugh's friend jumping on the two, allowing her to escape to a bathrooom.

Mignolet to start against Chelsea on Wednesday
I would love them to play a strong side, I hope he does, and go through and all that, and Wolves should be playing strong sides". We are Chelsea and we want to play all our games and try to win all our games. "That is a really good, strong group".

Labour party conference APPROVES rule changes on deselections
The decision comes amid the party's annual conference now taking place in Liverpool, with Brexit dominating the agenda. He added: 'But I was elected to empower the members of the party. 'What comes out of conference I will adhere to.

Ronaldo, Messi to miss FIFA The Best awards
Ronaldo also scored a memorable hat-trick in the FIFA World Cup but did not progress beyond the round of 16. Deschamps' victory was the second straight year a French coach has won the award.

Tiger Woods returns to Tour Championship with share of lead
Tiger Woods is in the mix for the FedEx Cup title after a sold five under 65 around East lake on Thursday, and he's ecstatic. DeChambeau, 25 and the victor of the opening two playoff series events , struggled with the driver on the East Lake course.

49ers fear Garoppolo has a torn ACL
Cornerback Richard Sherman injured his calf and will be out a few weeks according to NFL Network's Ian Rapoport. Soon after, Garoppolo left the game on a cart and did not return. "We'll find out for sure tomorrow".