Маск йде з посади голови правління Tesla через позов Комісії з цінних паперів і бірж

Голова правління компанії з виробництва електромобілів Tesla Ілон Маск погодився піти зі своєї посади та заплатити 20 мільйонів доларів штрафу. Такі умови угоди, яку він уклав 29 вересня із Комісією з цінних паперів і бірж Сполучених Штатів, повідомляють західні ЗМІ.

Маск зберігає за собою місце в правлінні заснованої ним компанії, проте зобов’язався не претендувати на посаду голови правління та не приймати таких пропозицій протягом трьох років. Він також залишається генеральним директором – відповідатиме за стратегічні рішення, однак буде підзвітним правлінню.

Такими виявились для Маска наслідки позову Комісії через його дописи в соцмережі Twitter, в яких він допустив перетворення компанії з публічної в приватну при вартості її акцій в 420 доларів за штуку.

Регулятор побачив у цій заяві ознаки шахрайства. Співголова виконавчого відділу комісії Стефані Авакан заявила, що слова Маска ввели в оману інвесторів.

Окрім штрафу в 20 мільйонів доларів від самого Маска, таку ж суму має сплатити і компанія Tesla.

Сам Маск назвав позов «необґрунтованим». За умовами угоди, він не повинен погоджуватись із обвинуваченнями комісії або оскаржувати їх.

З іншого боку, хоча Маск і лишиться директором компанії, Tesla погодилася призначити двох незалежних членів правління, запровадити новий незалежний комітет директорів та встановити додатковий контроль над комунікаціями Маска, заявляють в Комісії з цінних паперів.

Це може означати, що Маск більше не зможе без погодження з правлінням робити гучні заяви щодо своєї компанії.

Наразі невідомо, хто стане головою правління Tesla. Маск має залишити цю посаду протягом 45 днів, починаючи з 29 вересня.

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Tesla, Musk Settle Fraud Suit for $40M

Tesla and its CEO Elon Musk have agreed to pay a total of $40 million and make a series of concessions to settle a government lawsuit alleging Musk duped investors with misleading statements about a proposed buyout of the company.

The settlement with the Securities and Exchange Commission allows Musk to remain CEO of the electric car company but requires him to relinquish his role as chairman for at least three years.

Tesla must hire an independent chairman to oversee the company, something that should please a number of shareholders who have criticized Tesla’s board for being too beholden to Musk. 

The deal was announced Saturday, just two days after SEC filed its case seeking to oust Musk as CEO.

‘Reckless tweet’

Musk, who has an estimated $20 billion fortune, and Tesla, a company that ended June with $2.2 billion in cash, each are paying $20 million to resolve the case, which stemmed from a tweet Musk sent Aug. 7 indicating he had the financing in place to take Tesla private at a price of $420 per share.

“A reckless tweet cost a lot of money — the $20-million tweet,” said Michelle Krebs, executive analyst at Autotrader.

The deal could remove one cloud that hangs over Tesla. Investors fretted about the company’s ability to cope without Musk, a charismatic entrepreneur whose penchant for coming up with revolutionary ideas has drawn comparisons to one of Silicon Valley’s most revered visionaries, Apple co-founder Steve Jobs.

Tesla’s stock plummeted 14 percent Friday after the SEC filed its lawsuit, erasing more than $7 billion in shareholder wealth. Many analysts predicted the shares were bound to fall even further if Musk had been forced to step down. Tesla’s stock has dropped 30 percent since Aug. 7, closing Friday at $264.77.

The steep downturn in Tesla’s market value may have influenced Musk to have an apparent change of heart and negotiate a settlement. Musk had rejected a similar settlement offer before the SEC sued Thursday, maintaining he had done nothing wrong when he posted a tweet declaring that he had secured the financing to lead a buyout of Tesla.

New board members

The SEC alleged Musk wasn’t close to locking up the estimated $25 billion to $50 billion needed to pull off the buyout.

Musk and Tesla reached their settlement without admitting to or denying the SEC’s allegations.

Besides paying a fine and stripping Musk of his chairman’s title, Tesla also must appoint two more directors who have no ties to the company or its management. Musk will be allowed to remain on the board.

The company also must clamp down on Musk’s communications with investors, a requirement that might make its colorful CEO’s Twitter posts slightly less interesting.

Erratic behavior

Besides tweeting about a deal that the SEC alleged he didn’t have money to pay for, Musk had been engaging in other erratic behavior that had been raising questions about whether he should remain CEO.

Musk had raised hackles by ridiculing stock market analysts for posing fairly standard questions about Tesla’s shaky finances, and calling a diver who helped rescue 12 boys on a Thai soccer team from a flooded cave a pedophile, triggering a defamation lawsuit. He was also recently caught on a widely circulated video apparently smoking marijuana , a legal drug in Tesla’s home state of California.

The erratic behavior has convinced more analysts that Tesla needs to find a replacement for Musk, but the SEC settlement will allow the company to do so on its own timetable, if it decides to hire a new leader.

Tesla is also under mounting pressure to overcome its past manufacturing problems and produce enough vehicles to become consistently profitable after years of huge losses. 

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Canada FM Postpones UN Speech as Trade Talks Intensify

Canadian Foreign Affairs Minister Chrystia Freeland postponed her U.N. speech Saturday as free-trade talks between the U.S. and Canada intensified.

Freeland had been scheduled to deliver Canada’s address to the General Assembly in New York, but Canada exchanged the slot with another country. Freeland may or may not give the speech on Monday.

A senior Canadian government official said they were making progress in the talks but that it wasn’t certain that they would reach a deal soon. The official, who spoke on condition of anonymity, said Canada would sign only a good deal.

Canada, the United States’ No. 2 trading partner, was left out when the U.S. and Mexico reached an agreement last month to revamp the North American Free Trade Agreement. The U.S. and Canada are under pressure to reach a deal by the end of the day Sunday, when the U.S. must make public the full text of the agreement with Mexico.

U.S. President Donald Trump has said he wants to go ahead with a revamped NAFTA, with or without Canada. It is unclear, however, whether Trump has authority from Congress to pursue a revamped NAFTA with only Mexico, and some lawmakers say they won’t go along with a deal that leaves out Canada. 

Dairy tariffs

Among other things, the negotiators are battling over Canada’s high dairy tariffs. Canada also wants to keep a NAFTA dispute-resolution process that the U.S. wants to jettison.

U.S.-Canada talks bogged down earlier this month, and most trade analysts expected the Sept. 30 deadline to come and go without Canada’s reinstatement. They suspected that Canada, which had said it wasn’t bound by U.S. deadlines, was delaying the talks until after provincial elections Monday in Quebec, where support for Canadian dairy tariffs runs high.

But trade attorney Daniel Ujczo of the Dickinson Wright law firm, who follows the NAFTA talks closely, said the United States put pressure on Canada, contending there would “consequences” if it didn’t reach an agreement by the end of the day Sunday. Trump has repeatedly threatened to start taxing Canadian auto imports. Ujczo put the odds of a deal this weekend at 75 percent. 

Relations between the two neighbors have been strained since Trump assailed Canadian Prime Minister Justin Trudeau at the Group of Seven meeting in June, calling him “weak” and “dishonest.” Canadian leaders have objected to Trump’s decision to impose tariffs on Canadian steel, citing national security.

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A Pakistani American Startup Fighting Media Censorship

According to the latest report by the Committee to Protect Journalists in Pakistan, fatal violence against journalists has declined, but fear and self-censorship have grown. In this era, five Pakistani American students at Harvard University have created a startup that challenges censorship using the latest block-chain technology. Their mission is “making journalism truly free.” Saqib Ul Islam visited Harvard’s innovation lab to bring us the story of a new company called “Inkrypt.”

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US Consumers Spend More; Inflation Flattens

U.S. consumer spending increased steadily in August, supporting expectations of solid economic growth in the third quarter, while a measure of underlying inflation remained at the Federal Reserve’s 2 percent target for a fourth straight month.

Economists said Friday’s report from the Commerce Department should allay fears of the economy overheating and likely keeps the U.S. central bank on a gradual path of interest rate increases. The Fed raised rates Wednesday for the third time this year and removed the reference to monetary policy remaining “accommodative.”

“Growth is solid and inflation pressures modest,” said Chris Rupkey, chief economist at MUFG in New York. “This is exactly the environment the Fed needs to move interest rates up at a gradual pace as further rate hikes start to look like tightening.”

Consumer spending

The Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.3 percent last month after an unrevised 0.4 percent gain in July. Spending last month was driven by outlays on health care, which offset a drop in motor vehicle purchases.

August’s increase in consumer spending was in line with economists’ expectations. When adjusted for inflation, consumer spending rose 0.2 percent after climbing 0.3 percent in July.

The report came on the heels of data Thursday showing a decline in orders for key capital goods in August and a further widening of the goods trade deficit, which prompted economists to downgrade their gross domestic product growth estimates for the third quarter to as low as a 2.8 percent annualized rate.

Third-quarter GDP growth forecasts were previously as high as a 4.4 percent pace.

Economic growth

The economy grew at a 4.2 percent rate in the second quarter, powered by robust consumer spending. Economists said data in hand suggested that consumer spending was on track to grow around 3.6 percent in the third quarter, close to the 3.8 percent pace set in the April-June period.

Consumer spending is being driven by a tightening labor market, which is starting to boost wage growth, as well as higher savings. It is also being supported by robust consumer confidence.

A separate report Friday showed the University of Michigan’s consumer sentiment index at a six-month high in September. A survey earlier this week from the Conference Board showed consumer confidence hitting an 18-year high in September.

The Conference Board places more weight on the labor market.

The dollar was trading higher against a basket of currencies, while U.S. Treasury yields fell. Stocks on Wall Street were little changed in late afternoon trade.

Eyes on tariffs

In August, spending on goods increased 0.3 percent, likely lifted by higher gasoline prices. Spending on goods rose 0.5 percent in July. Outlays on services advanced 0.4 percent, with spending on health care accounting for much of the increase.

There was a moderation in monthly price gains in August. The personal consumption expenditures (PCE) price index excluding the volatile food and energy components was unchanged. That was the weakest reading since March 2017 and followed a 0.2 percent gain in July.

August’s flat reading left the year-on-year increase in the so-called core PCE price index at 2.0 percent. The core PCE index is the Fed’s preferred inflation measure. It hit the U.S. central bank’s 2 percent inflation target in March for the first time since April 2012.

Economists say inflation could slightly overshoot its target amid concerns an escalating trade war between the United States and China could lead to price increase for a range of consumer goods.

Washington on Monday slapped tariffs on $200 billion worth of Chinese goods, with Beijing retaliating with duties on $60 billion worth of U.S. products. The United States and China had already imposed tariffs on $50 billion worth of each other’s goods.

Walmart Inc, the largest U.S. retailer, said last week it might hike prices because of the duties on Chinese imports.

“With this $200 billion increase, you are effectively tripling the amount of goods subject to a tariff and that has potential to influence prices,” said Tim Quinlan, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

JPMorgan estimates that the tariffs could add 0.2 to 0.3 percentage point to core inflation.

In August, personal income rose 0.3 percent after increasing by the same margin in July. Wages jumped 0.5 percent, the biggest gain in seven months, after rising 0.3 percent in July.

The saving rate was unchanged at 6.6 percent last month.

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Google CEO to Testify Before US House on Bias Accusations

Google Chief Executive Sundar Pichai has agreed to testify before the U.S. House Judiciary Committee later this year over Republican concerns that the company is biased against conservatives, a senior Republican said Friday.

Republicans want to question Google, the search engine of Alphabet Inc, about whether its search algorithms are influenced by human bias. They also want to probe it on issues such as privacy, classification of news and opinion, and dealing with countries with human rights violations.

Pichai met with senior Republicans on Friday to discuss their concerns, House Majority Leader Kevin McCarthy said.

McCarthy told reporters after the meeting that it was “very productive” and “frank.”

“I think we’ve really shown that there is bias, which is human nature, but you have to have transparency and fairness,” McCarthy said. “As big tech’s business grows, we have not had enough transparency and that has led to an erosion of trust and, perhaps worse, harm to consumers.”

Alphabet Inc’s Google unit has repeatedly denied accusations of bias against conservatives. Pichai left the meeting without comment.

Pichai wrote in an internal email last week that suggestions that Google would interfere in search results for political reasons were “absolutely false. We do not bias our products to favor any political agenda.”

The CEO had been scheduled to be in Asia this week but canceled the trip to be in Washington.

The hearing will take place after the midterm congressional elections in November, McCarthy said.

Google came under fire from members of both parties earlier this month for refusing to send a top executive to a Senate Intelligence Committee hearing that included Facebook Inc and Twitter Inc executives.

Republicans have also raised concerns about Google’s dominance. Earlier this week, the Justice Department met with state attorneys general to focus on the need to protect consumer privacy when big technology companies amass vast troves of data, but came to no immediate conclusions.

Asked if Republicans will push to break up Google, McCarthy said: “I don’t see that.” He said the hearing will look at privacy, bias issues, China and other matters.

Pichai is also meeting with Democratic lawmakers and is due to meet with White House economic adviser Larry Kudlow on Friday, a White House official said Thursday.

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Ousting Musk at Tesla Viewed as Difficult, Possibly Damaging

Tesla without Elon Musk at the wheel? To many of the electric car maker’s customers and investors, that would be unthinkable. But that’s what government securities regulators now want to see.

The Securities and Exchange Commission has asked a federal court to oust Musk as Tesla’s chairman and chief executive officer, alleging he committed securities fraud with false statements about plans to take the company private.

The agency says in a complaint filed Thursday that Musk falsely claimed in an Aug. 7 statement on Twitter that funding had been secured for Tesla Inc. to go private at $420 per share, a substantial premium over the stock price at the time.

The SEC is asking the U.S. District Court in Manhattan to bar Musk from serving as an officer or director of a public company. It also is asking for an order enjoining Musk from making false and misleading statements along with repayment of any gains as well as civil penalties.

Ousting Musk, who has a huge celebrity status with more than 22 million Twitter followers, would be difficult and could damage the company. He’s viewed by many shareholders as the leader and brains behind Tesla’s electric car and solar panel operations.

The stock market shuddered at the prospect. Shares slid more than 12 percent to $269.52 in Friday morning trading after a number of analysts either downgraded the stock or issued negative notes.

Citi analyst Itay Michaeli downgraded Tesla Inc. shares to Sell/High Risk from Neutral/High Risk, telling investors in a note that the SEC case raises the risk of Musk’s ouster.

“There’s little question that Mr. Musk’s departure would likely cause harm to Tesla’s brand, stakeholder confidence and fundraising — thereby increasing the risk of triggering a downward confidence spiral given the state of Tesla’s balance sheet,” Michaeli wrote.

​’Reputational harm’

He also told investors that Musk could stay on, but “the reputational harm from this might still prevent the stock from immediately returning to ‘normal.’ ” Michaeli set a $225 one-year price target for the stock.

Tesla shares have a $130 “Musk premium” due to future business driven by Musk as a disrupter of multiple industries, but that could go away if Musk is ousted, Barclays analyst Brian Johnson wrote in a note.

“Should the SEC be successful in barring Mr. Musk from serving as an officer or director, investors would focus back on the value of Tesla as a niche automaker,” wrote Johnson, who reiterated an “Underweight” rating and set a price target of $210.

CFRA analyst Garrett Nelson downgraded the stock from “hold” to “sell” and reduced his price target to $225. “Despite Musk’s recent erratic behavior, we think most investors want him to remain with the company and they value shares at what we view as extremely lofty multiples given the potential for Musk’s vision to drive future growth,” he wrote. “Given uncertainty about Musk’s role going forward, we think a lower valuation is justified.”

Musk, in a statement issued by Tesla, disputed the SEC’s claims. “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 statement said.

According to a person knowledgeable about talks between Tesla and federal securities regulators, Musk rejected a settlement that would have allowed him to pay a small fine and stay on as CEO of the electric car company if he agreed to certain conditions, including restrictions on when he could release information publicly.

The person, who asked not to be identified because the negotiations were private, said Friday that Musk rejected the offer because he didn’t want a blemish on his record.

The SEC complaint alleges that Musk’s tweet harmed investors who bought Tesla stock after the tweet but before accurate information about the funding was made public.

No license in ‘celebrity status’

“Corporate officers hold positions of trust in our markets and have important responsibilities to shareholders,” Steven Peikin, co-director of the SEC’s Enforcement Division, said in a statement. “An officer’s celebrity status or reputation as a technological innovator does not give license to take those responsibilities lightly.”

Peter Henning, a law professor at Wayne State University and a former SEC lawyer, said it’s the first fraud case involving use of social media by the CEO of a public company. Musk and Tesla didn’t fully disclose details of the plan in the Aug. 7 tweet or in later communications that day as required, he noted.

“You can’t make full disclosure in 280 characters,” he said, referring to the length limit of a tweet.

Joseph Grundfest, a professor at Stanford Law School and former SEC commissioner, said Musk will likely want to settle before trial so that he could conceivably stay on as CEO, with some constraints such as prohibiting him from making public statements without supervision. But Musk also could agree to step down as CEO and instead take another title, such as chief production officer.

Grundfest also said that the challenge for the SEC is to “appropriately discipline Musk while not harming Tesla’s shareholders.”

According to the complaint, Musk met with representatives of a sovereign investment fund for 30 to 45 minutes on July 31 at Tesla’s Fremont, Calif., factory. Tesla has identified the fund as Saudi Arabia’s Public Investment Fund, which owns almost 5 percent of the company.

Fund representatives expressed interest in taking Tesla private and asked about building a factory in the Middle East, Musk told the SEC. But at the meeting, there was no discussion of a dollar amount or ownership stake for the fund, nor was there discussion of a premium to be paid to Tesla shareholders, the complaint said. Musk told the SEC that the lead representative of the fund told him he would be fine with reasonable terms for a go-private deal.

No specific terms

“Musk acknowledged that no specific deal terms had been established at the meeting and there was no discussion of what would or would not be considered reasonable. Nothing was exchanged in writing,” the complaint stated.

The SEC alleged in the 23-page complaint that Musk made the statements using his mobile phone in the middle of a trading day. That day, Tesla shares closed up 11 percent from the previous day.

The statements, the complaint said, “were premised on a long series of baseless assumptions and were contrary to facts that Musk knew.” Later in the month, Tesla announced that the go-private plan had been scrapped.

In its complaint, the SEC said that Musk’s statements hurt short sellers, who are investors who borrow a company’s stock betting that it will fall. Then they buy the shares back at a lower price and return them to the lenders, pocketing the profit.

In August, more than $13 billion worth of Tesla shares were being “shorted” by investors, the complaint said, as the stock was under pressure due to questions about Tesla’s finances and Musk’s erratic behavior.

Mark Spiegel, a short-seller and constant Musk critic, applauded the SEC for pursuing what he predicted would be easy for the government to prove.

Tesla’s board said in a statement Thursday night that it is “fully confident in Elon, his integrity, and his leadership of the company.” 

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