Telstra CFO Robyn Denholm takes over as chair of the electric car firm's board, while Musk remains as CEO
Tom Morgan, Online Reviews Editor
8 November 2018

Tesla has appointed Robyn Denholm as the new chair of its board of directors.

Denholm replaces Elon Musk, who was forced to step down and pay a $20 million (£15.3m) penalty as part of a settlement with the American Securities and Exchange Commission (SEC) over a charge of securities fraud. Musk remains as CEO of the electric car manufacturer, which was also required pay a penalty of $20m.

Denholm, until now chief financial officer of Australian telecoms company Telstra, will begin her new role immediately and serve on a full-time basis once her six-month notice period expires. Having been a member of the board as an independent director since 2014, Denholm will now temporarily step down as chair of Tesla's audit committee until she leaves Telstra.

Analysis: will the Tesla fairytale end this year?

Musk was forced to leave his position after the SEC charged him with fraud in response to his tweet in August suggesting he could take Tesla private at $420 a share, a substantial premium at the time, and had secured funding to do so. The SEC claimed that Musk knew the funding was not secured.

The tweet caused Tesla’s stock price to jump and, according to the SEC, “led to significant market disruption.” The SEC also said that Tesla had not put any procedures in place to determine that Musk’s tweets about the company were accurate or complete.

Musk initially said the SEC’s charges were “unjustified”, but has now reached an agreement with the body to settle the charges. Under the deal, Musk will be ineligible to be re-elected as company chairman for three years.

Tesla has also agreed to appoint two new independent directors to its board, establish a new committee of independent directors and put in place additional controls over Musk’s communications. 

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By settling, Musk neither admitted or denied misleading investors.

Numerous reports suggested Musk and Tesla had declined to settle the case when the SEC initially brought the charges, and there has been no comment from either on the deal at time of writing. As CEO, Musk will essentially remain in day-to-day charge of the firm, but he will likely face more oversight and control from the board and the new chairman. As Tesla's largest shareholder, Musk is likely to retain a seat on the board, and have influence in determining his successor as chair.

By allowing Musk to stay on as CEO under the settlement, the SEC has avoided the possibility that removing Musk from Tesla could cause investors to lose faith in the company's ability to thrive without him, potentially leading to more instability in its share price and value.

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The £30.6m of penalties paid by Musk and Tesla will be distributed to investors harmed by Musk’s tweet.

Stephanie Avakian, the co-director of the SEC’s enforcement division, said: “The total package of remedies and relief are specifically designed to address the misconduct at issue by strengthening Tesla’s corporate governance and oversight in order to protect investors.

“The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders.”

According to CNN, the US Department of Justice is also investigating if Musk's tweet constituted a criminal activity. The SEC is also continuing to investigate a separate case relating to Tesla's production goal claims.

Read more

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Tesla boss Musk considering taking firm private (from August 2018)

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Comments
21

30 September 2018
$420

30 September 2018

Securities fraud is seriously business and, let’s face it, 20 million is peanuts for this guy....

30 September 2018

Only goes to show, if you know how to minimise the penalty for this fraud, you can avoid losing your job, not paying back (for him) a few million and importantly not doing some Porridge time......!

Peter Cavellini.

30 September 2018

Tesla is a company that should be admired, especially when they essentially gave EVs credibility and put them on people's radar. And yet Elon Musk's attitude, antics and complete lack of automotive financial, business & manufacturing acumen and honesty undermines it all while he continually tries to make himself to be a victim and tries to create a 'them and us' scenario. And anyone who is critical about him or his products, he takes great offence to and oftens takes legal action against those who even utter a bad word. Tesla could and should be a great company.

30 September 2018
I'm glad to see the penalty was minimal. Was expecting this case to last years, and Musk stripped as CEO. Good, good... Now they can focus on fixing Model 3 bottlenecks and general build quality. Elon can be a little too truthful and transparent sometimes... He just needs to stay off Twitter.

30 September 2018

I agree he needs to stay off Twitter, but truthful and transparent are strange words for what in the UK would be defined as market abuse.

30 September 2018

A very rich prick, but a prick non the less, his attitude to critisism is a disgrace, his abilty to fulfil promised commitments are a joke, but hey his cars go really fast in a straight line. 

30 September 2018
Citytiger wrote:

his cars go really fast in a straight line. 

....but not so good around corners....

If he wasn't already an American citizen that would automatically qualify him for a green card.

1 October 2018

but like so many would love a car from his company.  Looking forward to seeing the Model 3 in Europe (maybe Model Y too)

typos1 - Just can’t respect opinion

8 November 2018
Citytiger wrote:

A very rich prick, but a prick non the less, his attitude to critisism is a disgrace, his abilty to fulfil promised commitments are a joke, but hey his cars go really fast in a straight line. 

Would never use bad language on a public forum but IMO his disregard of the law pales into insignificance when he alleged one of the Thai cave rescuers was a paedophile simply because he dare criticise another one of Musk's public stunts.

'Prick' sums him up perfectly.

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