- The SEC said it wants to bar Tesla CEO Elon Musk from being an officer or director of a public company after he allegedly made “false and misleading” statements in August about the possibility of taking Tesla private.
- According to Gene Munster, a managing partner at the venture capital firm Loup Ventures, removing Musk as CEO would be good for Tesla.
- In that case, Musk could take a role that would allow him to focus on strategy and product development, Munster said, which are arguably Musk’s strengths.
- If the company then hired a CEO with more expertise in manufacturing, Tesla could be in a “much healthier place” a year from now, Munster said.
The Securities and Exchange Commission seeks to bar Tesla CEO Elon Musk from being an officer or director of a public company. Gene Munster, a managing partner at the venture capital firm Loup Ventures, told Business Insider that could be good news for Tesla.
Munster said the SEC’s lawsuit against Musk, which alleges Musk made “false and misleading” statements in August about the possibility of taking Tesla private, will be “slightly disruptive” for Tesla in the next few months as the company seeks to stabilize its production and delivery infrastructures while beginning to deliver consistent profits.
“I think if this wasn’t happening, the company would be in a better place of hitting its goals for the December quarter and the March quarter of 19,” Munster said.
But beyond the next six months, the SEC’s lawsuit could work to Tesla’s advantage. The agency said in its lawsuit, filed Thursday, that it wants to prevent Musk from being an officer or director of a public company. In that case, Musk could take a role at Tesla that would allow him to focus on strategy and product development, Munster said, which are arguably Musk’s strengths. If the company then hired a CEO with more expertise in manufacturing, Tesla could be in a “much healthier place” a year from now, Munster said.
Munster said there’s about a 50% chance Musk is ordered to step down at Tesla’s CEO, which would force a positive change at the company that its board of directors is not willing to make.
“The board doesn’t have the backbone to do this, so the SEC is stepping in,” he said.
In a joint statement to Business Insider, Tesla and its board of directors said they had complete confidence in Musk and his ability to lead the company.
“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 US 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,” the board said.
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On August 7, Musk said that he had “funding secured” to convert Tesla into a private company at $420 per share and only needed a shareholder vote to confirm a go-private deal. In its lawsuit, the SEC alleges that Musk had not acquired the necessary funding or even discussed the terms he mentioned with any potential backers.
Musk said he was “deeply saddened and disappointed” by the SEC’s lawsuit in a company statement to Business Insider.
“This unjustified action by the SEC leaves me deeply saddened and disappointed. 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,” Musk said.
Read more about the SEC’s lawsuit against Elon Musk:
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- Elon Musk reportedly blew up a settlement with the SEC at the eleventh hour
- A former SEC chairman outlined the worst case scenario for Elon Musk now that the SEC has sued him
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- Tesla once looked like it could ride out the summer — but now the SEC wants to ban Elon Musk from being a CEO
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