The Securities and Exchange Commission announced that it has settled its lawsuit against Elon Musk. In the agreement, Musk will step down as chairman of Tesla for three years (although he will remain CEO) and pay a $20 million fine. Tesla itself was not named in the SEC lawsuit but it is a party to the settlement. It has agreed to pay a $20 million penalty, add two outside directors to the board, and better monitor Musk’s communications with investors.

All things considered, things could have been much worse for Musk and Tesla. But they also could have gone better–if he had been less impetuous and more willing to acknowledge that he’d done something wrong.

Our story begins, as you likely know, on August 7, when Musk tweeted that he was contemplating taking the company private.

As we all now know, funding was definitelynot secured. According to two letters that Musk’s lawyers sent the SEC during its investigation, Musk had a discussion over dinner with a Saudi fund manager about the funding of a go-private deal, and then a second conversation with the same fund manager a year later at the Tesla factory. When asked, the fund manager told Musk that he had the authority to make the decision to invest in taking Tesla private without needing approval from anyone else.

Now, obviously, there’s a very big difference between saying you have the authority to do something and making a commitment to do it. And a commitment of that magnitude is never really secure until it’s in writing, and sometimes not even then. Elon Musk is certainly smart enough to know all this. Yet he still assured his more than 22 million Twitter followers that this was just about a done deal.

Then, after giving the matter more careful consideration than he apparently did before announcing it on Twitter, Musk changed his mind and decided to keep Tesla public after all.

But it didn’t end there. Musk’s tweet sent Tesla’s share price flying upward, angering some very powerful investors who stood to lose billions from their bets against the company. The SEC took notice and began investigating, first whether a tweet is a legal way for the chairman of a public company to make a forward-looking statement, and second, whether Musk saying “funding secured” when that wasn’t true amounted to fraud. The agency concluded that it did.

What followed were some tough negotiations between the SEC and Musk’s lawyers as the two parties tried to reach agreement on a penalty. And by Thursday morning, they thought they had one. Musk would step down as Tesla chair for two years. He would pay a $10 million fine. The company would also pay a large fine. Musk would neither admit nor deny committing fraud. That meant he would not be allowed to say later on that he had done nothing wrong. 

That last item turned out to be the sticking point. After reportedly initially agreeing to the deal–a pretty good one, considering that the fraud charges might have been tough to beat–Musk apparently walked away because he insisted on being able to maintain his innocence. “Integrity is the most important value in my life, and the facts will show I never compromised this in any way,” Musk said in a statement he issued later that day, after the SEC called his bluff and filed its lawsuit.

Two days later, though, Musk was back at the bargaining table seeking an agreement, although he hasn’t said (or tweeted) what inspired him to change his mind so quickly. This time, though, the terms were a little tougher. Musk now had to step down as Tesla chair for three years, not two, and pay a $20 million fine instead of a $10 million one. And that sticking point where he could never say that he’d done nothing wrong? That was still part of the deal and he agreed to it nevertheless.

I’m sorry to say this, Elon Musk. You are an undisputed genius and you’ve done what everyone thought was impossible over and over with Tesla and SpaceX, and perhaps you will with The Boring Company as well. And your incredible transparency is a big reason people love and believe in you.

But. You are the chairman of a public company and you can’t just ignore SEC rules and expect there will be no consequences. Even more important, you need to think about some of the people those rules were created to protect. There are many thousands of Tesla shareholders and not all of them are Saudi fund managers. Some of them are just people who maybe can’t afford one of your cars but believe in you and want a small piece of your dream. The people you say you love.

Those people lost some of their investment on Friday, after news of the SEC lawsuit broke and Tesla’s share price fell 13 percent.

Though it may not seem that way, you’ve had a comparatively easy lesson. Tesla is still your company. You can resume your role as chairman in time. Model 3s are still rolling off the assembly line. Nothing irreparable has happened so far. I hope you’ve learned your lesson before it does.

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