Background of the Industry
Background of the Industry
The industry chosen is Tesla Motors, an American automotive company based in Palo Alto, California, that makes, designs, and vends electric vehicle machineries, electric cars, and battery merchandises. Tesla automotive is situated in Palo Alto, California. On July 1st, 2020, the industry jumped into a new record in its stock, which gave the electric vehicle a valuation of more than $ 208billions. However, its market capitalization is sitting at $450
From the start of the industry, Elon Musk has been consistently maintaining that the industry’s long-term goals and strategies are to innovate and create an affordable mass of electric vehicles in the market. The industry’s aim was to begin with a premium sports car for the prompt adopters and then create more conventional vehicles that include inexpensive compacts and the sedan.
Background of SEC organization
The SEC organization is a large American Independent agency of the federal government created due to the stock market crash to protect the national banking system and investors. SEC primarily enforces the federal proposing security rules and laws and regulates the security industry and electronic security markets in the United States of America.
The SEC organization’s mission is to enable capital formation, protect investors, and ensure efficient market. The SEC enforces legal necessities that regulated companies submit in quarterly and annual basis.
Legal Issues the Industry and the Organization were involved in the past year.
A year before the case arose, the Tesla CEO Elon Musk had tweeted that he had decided to line up a deal to take Tesla private. His sentiments made him run into trouble with the SEC. The SEC organization sued Elon Musk over his remarks stating that Elon was not as close to acquiring any funds for the deal as he had said. Nevertheless, Elon Musk reached an agreement with the SEC that wanted him to step down as the chairman of the board of directors of Tesla for three years, to pay a fine of $20, and receive an approval for any forthcoming information that will be relevant to the shareholders of Tesla.
Nonetheless, Elon Musk was not disgraced by the agreement. He lashed to the SEC organization in the following months claiming that he did not respect the settlements. In February, Elon Musk tweeted a prognostication vehicle production that SEC termed as a dishonor of the agreement. The SEC requested the Magistrate to hold Musk for his disrespect of the courts that ratified the agreements. Elon Musk and the SEC have spent many days debating whether his February tweet followed the terms of their agreement.
The main stakeholders involved in the Elon Musk and SEC case were–
- a) Tesla
- b) Elon Musk
- c) SEC (Securities Exchange Commission)
d)Steven Peiken (Co-director of SEC’s division of enforcement)
- e) Walker Newell
- f) Brent Smyth
- g) Barrett Attwood
- h) Steven Buchholz
- h) Erin Schneider
I)Jina Choi
only 3 stakeholders were directly connected to this case in hand–
.) Tesla, Elon Musk and SEC—SEC charged Musk because of is tweets that he will raise the share price of Tesla to $420 per share which disbalanced the market at that time and many investors suffered losses because of it.
Musk and Tesla had to equally pay a sum of 20 million USD each to settle the charges
Other Stakeholders’ connection to the case was
.) Steven Peiken–He was the co-director of SEC’s division of Enforcement. He stated in the news that, “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”
.) Walker Newell, Brent Smyth, Barrett Attwood–These three people conducted the SEC’s investigation
.) Steven Buchholz, Erin Schneider, Jina Choi–The SEC’s investigation were supervised by these three people.
When we closely observed this case study, we found out that,
Elon Musk did the most unethical thing and that was increasing the share price of the Tesla Company to $420 without even discussing with the main board of directors at that moment. This caused him serious trouble and he also suffered loss both in terms of finance as well as Position as he was stepped down as Tesla’s chairman and could not be re-elected for three years.
