The United States Securities and Exchange Commission recently confirmed that the institution have settled the fraud charges against Elon Musk, Tesla's controversial Chief Executive Officer. Additionally, SEC's settlement requirement calls for the installation of a new chairman whose main task is to oversee Mr. Musk's actions and decisions. Nevertheless, Mr. Musk will retain his position as chief executive officer of one of the world's biggest tech giants.
In a short term analysis, SEC's recent decision counts as a win for Tesla shareholders especially when Mr. Musk's role and influence in the company is to be considered. Following the release of SEC's decision, Tesla's stocks have found solace and bounced back with many analysts saying that it might even find a boost when the company reports its third-quarter deliveries before the week ends. According to an article on The Wall Street Journal, should Tesla take governance overhaul seriously it stands to create a stronger organization that can last for a long time.
Whoever sits as the new Tesla chairman will have a lot of ground to cover. Among the major roles this new chairman is about to take charge is reining Mr. Musk's impulses, and figuring out why some of Tesla's top executives keep leaving the company. The new chairman is also expected to adopt new practices and look for notable replacements for these executives.
Some observers have also opined that for Tesla to sustain its growth, the company's entire board should be able to perform better and must show resilience and independence from Mr. Musk's influence. Some have pointed out that Tesla is facing a serious challenge within the coming months as the company is expected to shore up its balance by raising new capital.
Aside from those challenges mentioned, many market analysts believe that Tesla should focus intently towards reining in Mr. Musk's decision making that have steered the company away from its lofty goal. Mr. Musk caught the ire of regulators when he said that he is seriously considering taking Tesla publicly as he had insider knowledge of possible investors, something that many considered to be fraud. Recently, Mr. Musk branded the SEC fraud lawsuit as "unjustified."
According to New York court filings, Mr. Musk and Tesla will have to pay each other $20 million for the settlement agreement. This money will then be disbursed to investors who lost a lot of money when Tesla stock prices dropped following Mr. Musk's tweet about bringing the company public.
