The Securities and Exchange Commission is suing Tesla founder Elon Musk over his Aug. 7 tweet about taking the automaker private. But the whole thing could have been avoided, if Musk hadn’t changed his mind at the last minute.
The Wall Street Journal and CNBC report Musk was very close to agreeing to a settlement, which would have resulted in a nominal fine and would not have required him to admit any guilt in the matter. But Musk refused the deal at the last minute.
That decision seems to be based on a few factors. Under the terms of the deal, Musk would have been barred from serving as chairman of Tesla for two years and the company would have to hire two independent directors. Musk also felt that by settling he would not be true to himself, according to CNBC.
The SEC, in a 23-page complaint filed in federal court, alleged “Musk knew or was reckless in not knowing” that he was making false and misleading statements when he said he had secured funding for a possible privatization of the company. The allegations are backed up by text messages, emails, and conversations with Musk and other Tesla executives.
Musk has called the suit “unjustified.” Investors, though, have been punishing the stock. Shares are down 11% in early trading Friday and are nearly 30% lower than they were when Musk send out the original tweet.