Elon Musk Walks Away From Deal With SEC At The Last Minute

Media playback is unsupported on your device                  Media caption Who is Elon Musk

The SEC claims Musk had not lined up backers and that he predicted the $420-per-share price based on a 20 per cent premium to the previous day's closing rate, because he thought this would be the typical uplift paid by a bidder taking a firm private. For someone so heavily invested in his companies (Musk has slept at the Tesla factory to improve production), the prospect of letting go is likely hard to imagine. The prospect of having the fraud charges and Musk's potential departure hanging over Tesla led to an immediate 12 percent drop in the company's share prices today.

An independent chairman will replace Musk, who will be ineligible for reelection for the next three years.

The eccentric billionaire came under investigation by the SEC after he abruptly tweeted in August that he was considering taking Tesla private at $420 per share and had already secured the funding (Tesla shares soared upon the initial tweet, rising more than 10 percent).

Saturday's settlement saw the SEC pull back from its demand that Musk be barred from running Tesla, a sanction that many investors said would be disastrous for the loss-making electric carmaker.

"We believe it is important for the confidence of investors that Mr. Musk remain involved", said a note from JPMorgan Chase. Tesla has been profitable in only two quarters in the past decade.

Musk said on Thursday he had done nothing wrong.

Tesla and its board "are fully confident in Elon, his integrity, and his leadership of the company", directors said in a joint statement Thursday. "Our focus remains on the continued ramp [up] of Model 3 production and delivering for our customers, shareholders and employees". That's putting intense pressure on Musk and the board to stop the bleeding. The company has huge ambitions to disrupt not just the auto industry but the energy markets by selling large batteries to utilities.

The company has projected profitability under generally accepted accounting principles in the second half of 2018, but some analysts think it will have to raise cash in coming months. Musk traditionally has had little trouble raising money on Wall Street. Why the rogue CEO wouldn't want to settle this whole and put his company's interests first aren't clear, especially when one considers the punishment the SEC was seeking was relatively light.

But the accord was refused, and now Tesla stock is tanking.

The very attributes that have fueled a mania around Elon Musk - his vision, brash personality and willingness to take risks - could prove to be his downfall.

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