Elon Musk Resigns As Tesla’s Chairman, Pays Rs. 150 Crore Fine For “Funding Secured” Tweet

There are many tweets that people have come to regret, but nobody probably regrets their Twitter activity more than the 63 characters typed into the social media service on 7th August by Elon Musk.

Elon Musk has been fined $20 million (Rs. 140 crore) and made to resign as the Chairman of the Tesla board after the US stock market authorities had determined that his “funding secured” tweet had contravened stock market laws. “Am considering taking Tesla private at $420. Funding secured,” Musk had tweeted on 7th August. Tesla’s stock, which had been trading at $350 at that point, had immediately shot up, with investors believing that it would soon be worth the $420 price that Musk had mentioned. 

But the SEC had on Thursday had sued Musk for fraud, alleging that he didn’t have the requisite funding in place, and his tweet artificially inflated Tesla’s stock price and caused confusion among investors. “Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source,” the prosecutors had said. The SEC had appeared serious about its case — its suit had demanded the Musk never be allowed to be the CEO of publicly traded company. 

Just two days after the suit had be filed, Musk has settled the case. He’s said he’ll pay a $20 million (Rs. 150 crore) fine, and agreed to step down as the Chairman of Tesla’s board within 45 days. Tesla has been fined a separate $20 million. Musk has also agreed to not seek reelection or accept an appointment as chairman for three years. But crucially, he’s been allowed to remain the CEO of Tesla, the company he’d founded in 2003.

This will seem like a bit of a comeuppance for Musk, who’d been thought of as a master of social media stunts. He’s previously used his Twitter account, which has over 22 million followers, to raise $1 million for the Boring company by selling hats, and a further $10 million by selling flamethrowers. He’s also used his Twitter account to help address consumer complaints, take on rivals and short sellers, and in the social media event of the year,  live-stream his Tesla being hurled into space on a SpaceX rocket.

But Musk might’ve flown too close to the Twitter sun. His latest stunt hasn’t only cost him the Chairmanship of Tesla’s board, but also resulted in a hefty fine for both him and his company. And the experience appears to have chastened him already — usually one to tweet out everything from company ideas to flirty tweets to his girlfriend, Musk has not reacted to the latest SEC case on Twitter — he’s sent out a statement to the press through his lawyers.