Elon Musk doubles down on personal attack against cave rescuer, calls him ‘child rapist’

Sept 5, 2018

Elon Musk’s erratic behavior of late has worried investors and Tesla Inc.’s board of directors, and his latest tirade is unlikely to ease those concerns.

In a series of emails to a reporter published Tuesday by Buzzfeed News, Musk doubled down on his personal attack against a British man who helped in the rescue of a youth soccer team trapped in a cave in Thailand, calling him without basis a “child rapist” who took “a child bride who was about 12 years old at the time,” adding that he welcomes a lawsuit. Musk also called a Buzzfeed reporter an expletive.

Musk had previously called the British cave-diving expert, Vernon Unsworth, a “pedo” in a tweet, then apologized, and Unsworth’s lawyer threatened in August to sue the Tesla chief executive for libel.

In the Buzzfeed emails, Musk also questioned Unsworth’s expertise and role in the rescue effort, again apparently without evidence to back his claims.

In July, Unsworth dismissed the mini submarine that Musk sent to Thailand as a publicity stunt, and said it would be useless in the rescue effort. But it is unclear why Musk has repeatedly and publicly attacked Usworth, 63, since then — or where the apparently baseless pedophilia allegations came from.

“Elon Musk can tweet his vindictive and vicious lie about Mr. Unsworth a hundred times and it will still be a lie,” Unsworth’s lawyer, L. Lin Wood, told Buzfeed in a statement. “After deleting the initial accusation and tweeting an apology, Mr Musk has continued to republish his false and unsupportable accusation. His conduct demonstrates that his recklessness is intentional and designed to harm Mr. Unsworth.”

Tesla had no comment, according to a spokesperson.

Last month, Musk told the New York Times that he was experiencing an “excruciating” year, and the Times reported that Tesla’s board members were worried about his health and well-being, as well as his use of the sleep aid Ambien. Musk has ramped up his social-media activity this year — often to his detriment. — and in August denied accusations from pop star Azealia Banks that he tweeted while high on drugs.

Tesla Accounting Chief Leaves After Month on the Job

Sept. 7, 2018 9:28 a.m. ET

Tesla Inc.’s chief accounting officer, Dave Morton, left the company after less than a month on the job, citing the level of public attention on the electric-car maker and saying the pace within the company had exceeded his expectations.

Mr. Morton is the latest Tesla executive to leave the company, which has seen key engineering, technical and sales executives depart. Chief Executive Elon Musk has said he sees executive turnover as being in line with that of other large companies and has announced plans for a reorganization aimed at flattening the layers of managers.

In a securities filing Friday, Tesla said Mr. Morton resigned, effective immediately, on Tuesday after joining the company Aug. 6.

“The level of public attention placed on the company, as well as the pace within the company, have exceeded my expectations. As a result, this caused me to reconsider my future,” Mr. Morton said in the filing.

Mr. Morton said he had “no disagreements with Tesla’s leadership or its financial reporting,” and that he still believed in “Tesla, its mission and its future prospects.” Tesla said its accounting and personnel functions will be overseen by Chief Financial Officer Deepak Ahuja and its corporate controller, “as had been the case prior to and during Dave’s transition to Tesla.”

Mr. Morton joined the electric auto maker from Seagate Technology Plc., where he served as its chief financial officer. He had replaced Eric Branderiz, who left Tesla in March.

At least 50 vice presidents or higher-ranking executives have departed over the past 24 months, according to people familiar with the company, partly because of its acquisition of SolarCity Corp.

Another Tesla executive leaves, this time it's HR boss Gaby Toledano
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• Tesla's chief people officer Gaby Toledano is leaving the company after announcing a leave of absence last month, Bloomberg reports.
• She joined Tesla in May 2017.
• Tesla's chief accounting officer Dave Morton also resigned this week.

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Sept. 7, 2018

Tesla's HR boss Gaby Toledano will not return from the leave of absence she took last month, Bloomberg reports.

Toledano would be the second high-level executive to resign from the company this week. Chief accounting officer Dave Morton announced in a filing Friday that he had left the company this past Tuesday after only a month on the job.

Tesla announced Toledano joined Tesla in May 2017 as chief people officer.

Tesla's junk bonds sink to their lowest level yet below 85 cents on the dollar

Sept 7, 2018

Tesla Inc.'s high-yield bonds fell to a fresh record low on Friday, as investors digested the news that the company's chief accounting officer has quit. The 5.300% notes that mature in August of 2025 fell to 84.999 cents on the dollar, according to trading platform MarketAxess, to yield 8.178%. On a spread basis, the bonds were trading at 527 basis points over Treasurys, 36 basis points wider on the day.

The bonds have fallen along with the stock amid concerns about the erratic behavior of Chief Executive Elon Musk. In the latest move stirring controversy, Musk appeared to smoke marijuana during an interview on "The Joe Rogan Experience" podcast late Thursday.

Tesla misses Model 3 production goal of 6,000 units per week, but on track for overall Q3 goal

Sep. 2nd 2018

Tesla has been aiming for a production rate of 6,000 Model 3 vehicles per week by the end of August and an overall production of 50,000 to 55,000 Model 3 vehicles throughout the third quarter.

Electrek has learned that the automaker missed the 6,000 unit production rate goal, but Tesla is nonetheless on track for its overall third quarter goal.

As first revealed in the last episode of our podcast and based on the same reliable source familiar with Tesla’s production, the automaker built about 6,400 vehicles during the last week (last 7 days) of August (from 24th to 31st midday) including about 4,300 Model 3 vehicles.

That’s behind Tesla’s goal since the automaker previously disclosed that it was pushing for 6,000 units per week by the end of August.

Paint issues causing Tesla Model 3 bottlenecks, Elon Musk admits

September 4, 2018

For all the assembly issues faced by the Tesla Model 3 in the first year of production, from battery modules to steel-welding robots, perhaps the last thing that many industry observers were expecting to be holding up the electric sedan are paint issues. But that's what Tesla CEO Elon Musk blamed days ago when asked by a Model 3 buyer who had been waiting beyond the original delivery window.

It all started when one particular reservation holder contacted Musk via Twitter, indicating that he was already scheduled to take delivery of a car but then learned that the VIN itself had been canceled.

"Sorry, we've put pretty extreme rules in place for paint & quality in general," Musk answered. "If need be, we're repainting/replacing entire sections of car or building whole new cars. Got to be done."

Musk indicated that paint issues were not only holding up the production process of some Model 3s as they were being repainted, but that Tesla has had to build entirely new cars. When a blogger asked for specifics, Musk indicated that some multicoat colors were more difficult to execute to specification than others.



Neither Musk nor Tesla indicated just what percentage of cars were being repainted or what percentage of orders were being redone entirely with new cars being built, and given the range of items that has held up delivery over the past six months, it is perhaps difficult to isolate the exact numbers. Most of the assembly "artifacts" that Tesla Model 3 buyers have been reporting have concerned panel-fit issues, particularly the doors, trunks and C-pillar panels.

Variable paint finishes have been reported as well from time to time, but this issue has received relatively little attention until now.

Tesla Is Facing U.S. Criminal Probe Over Elon Musk Statements

September 18, 2018

Tesla Inc. is under investigation by the Justice Department over public statements made by the company and Chief Executive Officer Elon Musk, according to two people familiar with the matter. The criminal probe is running alongside a previously reported civil inquiry by securities regulators.

Federal prosecutors opened a fraud investigation after Musk tweeted last month that he was contemplating taking Tesla private and had “funding secured” for the deal, said the people, who were granted anonymity to discuss a confidential criminal probe. The tweet initially sent the company’s shares higher.

Tesla confirmed it has been contacted by the Justice Department.

“Last month, following Elon’s announcement that he was considering taking the company private, Tesla received a voluntary request for documents from the DOJ and has been cooperative in responding to it,” the company said in a statement released Tuesday following Bloomberg’s report of the investigation. “We have not received a subpoena, a request for testimony, or any other formal process. We respect the DOJ’s desire to get information about this and believe that the matter should be quickly resolved as they review the information they have received.”

The investigation by the U.S. attorney’s office in the Northern District of California follows a subpoena issued by the Securities and Exchange Commission seeking information from the maker of electric cars about Musk’s plans to go private, which he has since abandoned.

The criminal inquiry is in its early stages, one of the people familiar with the matter said. Justice Department probes, like the civil inquiries undertaken by the SEC, can take months. They sometimes end with prosecutors deciding against bringing any charges.

Abraham Simmons, a spokesman for the U.S. attorney’s office in San Francisco, declined to comment.

SEC Probe

SEC enforcement attorneys in the San Francisco office were already investigating Tesla before Musk sent his tweet on taking the company private, Bloomberg reported Aug. 9. The existing probe focuses on whether Tesla had issued misleading pronouncements on manufacturing goals and sales targets, according to the two people familiar with the matter.

It’s unclear whether the criminal investigation is that broad. Prosecutors in securities-fraud investigations could seek evidence on matters including whether company leaders intentionally lied to investors about the health of the business.

Musk exposed himself to legal risk by tweeting Aug. 7 that he had the funding for a buyout even though that may not have been the case. Almost a week later, Musk said the basis for his statement was conversations with Saudi Arabia’s Public Investment Fund, which first expressed interest in helping take the company private in early 2017.

Abandoned Effort

Tesla’s board then said that it hadn’t received a formal proposal from Musk, who’s also the company’s chairman, nor had it concluded whether going private would be advisable or feasible. Less than three weeks after his initial tweets, Musk abandoned the effort.

Now that Musk’s tweeting has attracted the Justice Department’s attention, investigators there could extend their review to other public statements made by the CEO about the company’s health, according to one of the people familiar with the matter. Authorities could also look into the circumstances surrounding the resignation of Tesla’s Chief Accounting Officer, Dave Morton, after less than a month on the job, the person said.

Morton, a former chief financial officer for computer hard-drive maker Seagate Technology Plc, joined Tesla one day before Musk tweeted that he was considering buying out some investors at $420 a share and taking the company private.

SEC Sues Elon Musk for Fraud, Seeks Removal From Tesla

Regulators accuse auto maker’s CEO of misleading shareholders in saying he had funding for a corporate buyout

Sept. 27, 2018

U.S. securities regulators on Thursday sought to force Tesla Inc. Chief Executive Elon Musk out of the company he helped get off the ground about 15 years ago, alleging he misled shareholders when he tweeted he had funding for what would have been the largest-ever corporate buyout.

The complaint filed by the Securities and Exchange Commission came after a last-minute decision by Mr. Musk and his lawyers to fight the case rather than settle the charges.

The filing by the SEC in federal court in Manhattan threatens to deal a severe blow to the Palo Alto, Calif., electric car maker. Its brand and Mr. Musk are closely intertwined, and analysts have said the company’s roughly $50 billion market value is driven by Wall Street’s appreciation for Mr. Musk’s vision and skill as an innovator.

Tesla wasn’t named in the suit as a defendant, but the SEC is seeking to bar Mr. Musk, Tesla’s largest shareholder and its top executive, from serving as an officer or director of any U.S. public company.

“This unjustified action by the SEC leaves me deeply saddened and disappointed,” Mr. Musk said in a statement. “I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

The SEC had crafted a settlement with Mr. Musk — approved by the agency’s commissioners — that it was preparing to file Thursday morning when Mr. Musk’s lawyers called to tell the SEC lawyers in San Francisco that they were no longer interested in proceeding with the agreement, according to people familiar with the matter. After the phone call, the SEC rushed to pull together the complaint that it subsequently filed, the people said.

The case ranks as one of the highest-profile civil securities-fraud cases in years. Its filing less than two months after the Aug. 7 tweets by Mr. Musk also marks an unusually rapid turnaround by an agency that has been under fire for its perceived failure to promptly bring significant cases in the financial crisis and other episodes. “It means there was not that much investigation they needed to do to get comfortable that it was a case they should bring, but also a case they can win,” said Michael Liftik, a former SEC enforcement lawyer now at Quinn, Emanuel, Urquhart & Sullivan LLP.

The SEC said that contrary to the statements he made in several Twitter messages on Aug. 7, Mr. Musk “knew that he had never discussed a going-private transaction at $420 per share with any potential funding source.” The agency said the statements and omissions of fact caused disruption to the market for Tesla shares—which rose more than 10% the day of the tweets—and harm to investors.

“It’s an easy case,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “He said in the tweet he had financing, and apparently he didn’t. … It’s about as straightforward as you can get.”

The claims against Mr. Musk cap a year of turmoil for the auto maker, whose market value rivals that of much-larger General Motors Co. despite the fact that Tesla hasn’t turned an annual profit.

As Tesla has struggled since starting production of its mass-market Model 3 sedan in July of last year, its limited cash supply has taken a hit, placing the company under increased scrutiny about whether Mr. Musk would need to raise additional funds.

He has said Tesla won’t need to do so and has promised that he can keep the rate of Model 3 production at a pace that will help the company become cash-flow positive this quarter and profitable.

Despite his assurance, many analysts say Tesla will need to raise more money, in part because the company has debt coming due next year and because much of the growth projected by the auto maker would require large investments.

A Tesla without Mr. Musk could have a tougher time raising funds, according to David Whiston, an analyst for Morningstar Research Services. “Without Musk, Tesla is just an auto maker burning too much cash and holding too much debt,” Mr. Whiston said.

Mr. Musk jolted shareholders Aug. 7 when he tweeted that he planned to take the company private in a deal that would have been worth $72 billion.

The SEC alleged in its lawsuit that Mr. Musk first informed Tesla’s board of directors, chief financial officer and general counsel on Aug. 2 that he wanted to take the company private at $420 a share.

Mr. Musk told the SEC that he had met with representatives of a sovereign-wealth fund on July 31, according to the lawsuit. The fund’s lead representative, according to Mr. Musk, “expressed interest in taking Tesla private,” the lawsuit states.

Mr. Musk said in a blog post on Aug. 13 that Saudi Arabia’s sovereign-wealth fund had approached him several times over nearly two years about providing financial support to take Tesla private.

But Mr. Musk’s discussion with the sovereign-wealth fund didn’t include any financial details about such a transaction, the SEC alleged. The parties didn’t, for instance, discuss how much of a premium over Tesla’s current trading price would be offered to shareholders. The lawsuit says Mr. Musk chose $420 by estimating he would need to offer a 20% premium—which would amount to $419—and then rounding up by $1.

The SEC said in its complaint that “Musk stated that he rounded up the price to $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,’” the SEC’s complaint says. The number “420” is sometimes associated with marijuana.

Seventeen days after the tweets, Mr. Musk announced he decided against the idea.

Tesla’s 5.3% notes due 2025 were trading late Thursday at around 85 cents on the dollar, down from 87.129 cents just before the news, according to MarketAxess. The bonds had recently rebounded from the low of 81.75 cents reached on Sept. 7.

Adding to concern about the suit is Mr. Musk’s reputation for being a difficult leader. Tesla has seen an exodus of executives over the past two years, including its top sales officer and engineering chief, leaving a clear line of succession unclear. The company’s board has faced scrutiny for its oversight of Tesla’s top executive.

Mr. Musk may be the most prominent company executive the SEC has moved against since Angelo Mozilo, the former CEO of Countrywide Financial, who paid $67.5 million in 2010 to settle allegations that he misled investors about Countrywide’s subprime mortgages. Mr. Mozilo didn’t admit or deny the SEC’s charges.

Tesla's Musk pulled the plug on a settlement with the SEC at the last minute

Sept 28, 2018

Tesla and the Securities and Exchange Commission were very close to a no-guilt settlement Thursday, reported CNBC's Andrew Ross Sorkin on Friday, citing sources. But, these people say Musk pulled out of the agreement at the last minute.

Under the terms of the deal, Musk and Tesla would have had to pay a nominal fine, and he would not have had to admit any guilt. However, the settlement would have barred Musk as chairman for two years and would require Tesla to appoint two new independent directors, reported CNBC's David Faber, citing sources.

Musk reportedly refused to sign the deal because he felt that by settling he would not be truthful to himself, and he wouldn't have been able to live with the idea that he agreed to accept a settlement and any blemish associated with that, the sources said.

Musk said Thursday the SEC's allegations are "unjustified" and that he acted in the best interests of investors.

"Tesla and the board of directors are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful U.S. auto company in over a century. Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees," said Tesla's board of directors in a statement.

The Wall Street Journal was first to report news of the proposed settlement Musk turned down.

For Tesla, the stakes are high. It is unclear if Musk will step down and what the company would be like without him at the helm. These issues have been a distraction for the company, which has been trying to ramp up production of its first mass market vehicle, the Model 3.

There is about a 25 percent change Musk remains CEO of Tesla now that the SEC is suing the company, said Gene Munster, a managing partner of venture capital firm Loup Ventures, which invests in technology companies.

Since Musk so far has chosen to fight this, it could take years to reach an outcome, said Bernstein analyst Toni Sacconaghi in a note Friday.

"In the absence of a settlement, the mere possibility that Musk could be removed as CEO (or entirely from Telsa) is likely to cast an overhang on the stock, and make it extremely difficult for the company to raise capital (either private or public)," Sacconaghi said.

The settlement notably would have gone some way in eliminating some the overhang on the stock.

The SEC's Low Burden of Proof

This law-enforcement agency can impose quasi-criminal penalties based on the mere preponderance of evidence.

Because SEC cases are nominally civil rather than criminal, courts hold the agency to the lightest burden of proof known to modern law, the mere "preponderance of evidence" standard. If guilt appears even slightly more probable than innocence, the SEC wins. It's the same standard that applies when one private citizen sues another for damages based on a breach of contract or a slip-and-fall injury.

Even in civil cases, however, charges of fraud are often subjected to an intermediate standard that requires proof by "clear and convincing evidence." Oddly enough the SEC usually isn't held to this standard either, even when it accuses people of fraud.

A football metaphor can simplify these varying degrees of proof, if we envision a one-possession game with the government team receiving the kickoff. Beyond reasonable doubt requires the government to score a touchdown to win; clear and convincing evidence requires a field goal; and preponderance of evidence requires advancing the ball at least an inch past the 50-yard line.

Why does the SEC have such a negligible burden of proof? Mostly it's the result of historical fortuity and subsequent inertia.

Until the mid-1980s, the agency was a sleepy regulator with relatively little power to punish wrongdoers. If the SEC caught someone violating the securities laws, it could ask a court to stop the violation and force the violator to give up any illicit gains. It could also kick the violator out of the securities industry. That was about it.

In 1981, the Supreme Court decided, by a 7-2 vote in Steadman v. SEC, that the SEC could ban wrongdoers from the securities industry based on a mere preponderance of evidence. Two federal appellate courts separately concluded, around the same time, that the preponderance standard should govern when the SEC seeks a court order that tells a wrongdoer to stop violating the law. Since then, remarkably few cases have addressed the agency's burden of proof in any depth.

After these early precedents, Congress began a decades-long campaign to transform the SEC into an aggressive punisher. The agency now proudly—and accurately—proclaims on its website: "First and foremost, the SEC is a law enforcement agency."

Beginning with the Insider Trading Sanctions Act of 1984, and followed by the Securities Enforcement Remedies Act of 1990, Sarbanes-Oxley in 2002 and Dodd-Frank in 2010, Congress has incrementally empowered the SEC to inflict more and more crippling financial punishment on alleged lawbreakers, but with little attention paid to the SEC's burden of proof or similar due process concerns.

SUMMARY

1. This case involves a series of false and misleading statements made by Elon Musk, the Chief Executive Officer of Tesla, Inc. (“Tesla”), on August 7, 2018, regarding taking Tesla, a publicly traded company, private. Musk’s statements, disseminated via Twitter, falsely indicated that, should he so choose, it was virtually certain that he could take Tesla private at a purchase price that reflected a substantial premium over Tesla stock’s then-current share price, that funding for this multi-billion dollar transaction had been secured, and that the only contingency was a shareholder vote. In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source.

2. At approximately 12:48 p.m. EDT on August 7, 2018, during trading hours, Musk tweeted to his over 22 million Twitter followers, “Am considering taking Tesla private at $420. Funding secured.” This statement was false and misleading. Over the next three hours, Musk made a series of additional materially false and misleading statements via Twitter including:

- “My hope is *all* current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla.”
- “Shareholders could either to [sic] sell at 420 or hold shares & go private.”
- “Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote.”

3. Musk knew or was reckless in not knowing that each of these statements was false and/or misleading because he did not have an adequate basis in fact for his assertions. When he made these statements, Musk knew that he had never discussed a going-private transaction at $420 per share with any potential funding source, had done nothing to investigate whether it would be possible for all current investors to remain with Tesla as a private company via a “special purpose fund,” and had not confirmed support of Tesla’s investors for a potential going-private transaction. He also knew that he had not satisfied numerous additional contingencies, the resolution of which was highly uncertain, when he unequivocally declared, “Only reason why this is not certain is that it’s contingent on a shareholder vote.” Musk’s public statements and omissions created the misleading impression that taking Tesla private was subject only to Musk choosing to do so and a shareholder vote.

4. Investors reacted to Musk’s August 7 tweets. From the time of Musk’s first tweet that day until the close of trading on August 7, Tesla’s stock price increased by more than 6% on significantly increased volume and closed up 10.98% from the previous day.

5. Musk’s false and misleading public statements and omissions caused significant confusion and disruption in the market for Tesla’s stock and resulting harm to investors.

. . .

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[SNIP]

SEC settles charges with Tesla's Elon Musk, will remain as CEO but relinquish chairman role

Sep. 29, 2018

The Securities and Exchange Commission has settled charges with Tesla CEO Elon Musk over his aborted bid to take the company private, with the billionaire expected to remain as the helm of the company but relinquishing his chairman title and getting slapped with a hefty fine.

As part of the settlement, which is still subject to court approval, Musk will also pay a civil penalty of $20 million and give up his role as chairman of the board for at least three years. Additionally, Tesla will also pay a $20 million fine, and appoint two new independent directors to the board.

The original SEC complaint alleged that Musk issued "false and misleading" statements and failed to properly notify regulators of material company events, after posting on Twitter that he had secured funding to take Tesla private.

Musk's prolific use of Twitter has created several high-profile headaches for him personally, as well as the company he founded. In settling the charges, regulators faulted Tesla for not exerting more control over Musk's tweeting.

"The SEC also today charged Tesla with failing to have required disclosure controls and procedures relating to Musk's tweets, a charge that Tesla has agreed to settle," the agency said in a statement.

"The settlements, which are subject to court approval, will result in comprehensive corporate governance and other reforms at Tesla—including Musk's removal as Chairman of the Tesla board—and the payment by Musk and Tesla of financial penalties."

"The resolution is intended to prevent further market disruption and harm to Tesla's shareholders," added Steven Peikin, Co-Director of the SEC's Enforcement Division, in a statement.

Elon Musk Settles SEC Fraud Charges; Tesla Charged With and Resolves Securities Law Charge

Settlement Requires Musk to Step Down as Tesla’s Chairman; Tesla to Appoint Additional Independent Directors; Tesla and Musk Agree to Pay $40 million in Penalties

FOR IMMEDIATE RELEASE
2018-226

Washington D.C., Sept. 29, 2018 —

The Securities and Exchange Commission announced today that Elon Musk, CEO and Chairman of Silicon Valley-based Tesla, Inc., has agreed to settle the securities fraud charge brought by the SEC against him last week. The SEC also today charged Tesla with failing to have required disclosure controls and procedures relating to Musk’s tweets, a charge that Tesla has agreed to settle. The settlements, which are subject to court approval, will result in comprehensive corporate governance and other reforms at Tesla—including Musk’s removal as Chairman of the Tesla board—and the payment by Musk and Tesla of financial penalties.

According to the SEC’s complaint against him, Musk tweeted on August 7, 2018 that he could take Tesla private at $420 per share — a substantial premium to its trading price at the time — that funding for the transaction had been secured, and that the only remaining uncertainty was a shareholder vote. The SEC’s complaint alleged that, in truth, Musk knew that the potential transaction was uncertain and subject to numerous contingencies. Musk had not discussed specific deal terms, including price, with any potential financing partners, and his statements about the possible transaction lacked an adequate basis in fact. According to the SEC’s complaint, Musk’s misleading tweets caused Tesla’s stock price to jump by over six percent on August 7, and led to significant market disruption.

According to the SEC’s complaint against Tesla, despite notifying the market in 2013 that it intended to use Musk’s Twitter account as a means of announcing material information about Tesla and encouraging investors to review Musk’s tweets, Tesla had no disclosure controls or procedures in place to determine whether Musk’s tweets contained information required to be disclosed in Tesla’s SEC filings. Nor did it have sufficient processes in place to that Musk’s tweets were accurate or complete.

Musk and Tesla have agreed to settle the charges against them without admitting or denying the SEC’s allegations. Among other relief, the settlements require that:
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• Musk will step down as Tesla’s Chairman and be replaced by an independent Chairman. Musk will be ineligible to be re-elected Chairman for three years;
• Tesla will appoint a total of two new independent directors to its board;
• Tesla will establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk’s communications;
• Musk and Tesla will each pay a separate $20 million penalty. The $40 million in penalties will be distributed to harmed investors under a court-approved process.

“The total package of remedies and relief announced today are specifically designed to address the misconduct at issue by strengthening Tesla’s corporate governance and oversight in order to protect investors,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division.

“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,” added Steven Peikin, Co-Director of the SEC’s Enforcement Division. “The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders.”

The SEC’s investigation was conducted by Walker Newell, Brent Smyth, and Barrett Atwood and supervised by Steven Buchholz, Erin Schneider, and Jina Choi in the San Francisco Regional Office and Cheryl Crumpton in the SEC’s Home Office.

Tesla achieves Model 3 production goal for record quarter with 2 days still to go

Sep. 28th 2018

Electrek has learned that Tesla already achieved the goal for a new record production with two days still to go before the end of the quarter.

We have been tracking Tesla’s production in the past few weeks of this critical period as the company is attempting to become profitable.

As we reported last week, Tesla achieved a new record day of Model 3 production, but it was cutting it close for the quarterly goal.

The automaker had been guiding a production of 50,000 to 55,000 Model 3 vehicles for the third quarter.

According to a reliable source familiar with Tesla’s production, the automaker had a strong week of production and managed to bring the total number Model 3 produced to over 51,000 vehicles.

For the first time in months, Tesla was able to produce about 5,000 Model 3 vehicles over seven days.

The total production for the week was at around 6,700 vehicles – bringing the total for the quarter to about 77,400 vehicles.

Tesla was able to maintain production of about 1,100 cars per day over four days this week and about 800 Model 3’s per day over three of those days. It’s one of the highest levels of production that Tesla was ever able to maintain.

Earlier this month, CEO Elon Musk said that Tesla is on track for “the most amazing quarter in their history” and that they are “building and delivering more than twice as many cars as they did last quarter.” Tesla said that it built 53,339 vehicles, including 28,578 Model 3’s last quarter.

Tesla ‘very close’ to profitability, Elon Musk tells employees

Published: Sept 30, 2018 6:26 p.m. ET

Tesla Inc. is on the verge of making a profit, Chief Executive Elon Musk reportedly told employees in a weekend email, as it scrambled to boost production and deliver cars on the last day of the third quarter.

According to Bloomberg News, Musk sent the encouraging email Saturday, just hours after settling a Securities and Exchange Commission fraud investigation that will cost Musk his post as chairman, and he and the company $40 million in penalties. Musk and Tesla agreed to the settlement without admitting or denying the SEC allegations.

“We are very close to achieving profitability and proving the naysayers wrong, but, to be certain, we must execute really well tomorrow (Sunday),” Musk wrote in the email, according to Bloomberg. “If we go all out tomorrow, we will achieve an epic victory beyond all expectations.”

Sunday is the last day of the third quarter, and the highly anticipated production numbers could be released as soon as Monday. Tesla was going all out over the weekend, even recruiting an army of volunteers to help deliver new Model 3 sedans, Bloomberg reported.

Tesla had vowed to produce between 50,000 and 55,000 Model 3s this quarter. On Friday, the online publication Electrek reported Tesla had passed the 51,000 mark a couple of days before the end of the quarter.

While delivering that ramped-up production number would be impressive, turning a profit would be even more so. Tesla has a long record of losses, and electric-car makers have never consistently achieved profitability.