Elon Musk will step down as Tesla chairman to settle fraud charges brought by the U.S. over claims he made saying he'd take his company private. As part of Musk's settlement, both Tesla and Musk will each pay a $20 million fine — and Musk can stay on as CEO, the Security and Exchange Commission (SEC) announced Saturday. What does that mean for Musk and Tesla? And what are the differences between these two roles anyway? We take a look at what sets the CEO and chairman roles apart. The role of CEO A CEO is a company's top decision-maker and serves as the public face of a company. This post is responsible for the company's overall performance and commitment to its internal and external stakeholders, former P&G CEO and current Snap board director Alan George Lafley writes in Harvard Business Review. The CEO, writes Lafley, decides which business the company is and isn't in, shapes its values and balances the investments the company makes in both the present and the future. A study tracking CEO time from two Harvard researchers found that chief executives spend 25 percent of their time speaking to others and building relationships, 25 percent on functional and business unit reviews, 16 percent on organization and culture, and 21 percent on strategy. A bulk of these work-tasks often take place during meetings. Dedicating himself solely to being Tesla's CEO may help Musk regain control of his company's daily operations and focus less on shareholder demands. Musk, a hands-on leader, has been known to put himself on the production line to help Tesla through its manufacturing sprints, unusual for a CEO. The role of chairman<doc-sep>Elon Musk will be able to help pick the person who will succeed him as chairman of Tesla. Musk is stepping down from the role as a result of his settlement agreement with the Securities and Exchange Commission (SEC) over his series of tweets about possibly taking the company private — including the infamous "funding secured" tweet. He will also be able to help pick the two new independent directors the SEC ordered Tesla to add to its board. Tesla's board has already been under fire for being too deferential to Musk. Business Insider got a copy of the settlement documents, which lay out the specific terms that Tesla and Musk agreed to. Elon Musk may soon be out as chairman of Tesla, but he'll be able to pick his successor and serve with that person on the electric car company's board. The settlement agreements Musk and Tesla reached with the Securities and Exchange Commission don't include any kind of bar on Musk's continued service as a director of the car company. The agreements, copies of which Business Insider obtained from the Securities and Exchange Commission on Wednesday, also do not include any provision that would bar him from voting his shares in favor of or against nominees to the Tesla's board. That means that despite being forced to step down as chairman as part of those agreements, Musk could continue to have a lot of sway over the body that is supposed to oversee him as CEO. Musk is Tesla's largest shareholder, holding some 22% of the company's outstanding shares at the end of last year. "Musk is still the CEO and his friends still control the board, so tell me what really changed," said Lynn Turner, a former chief accountant of the Securities and Exchange Commission, in an interview with Business Insider. The settlements were related to Musk's infamous "funding secured" tweets regarding a potential move to take Tesla public. The SEC charged that he made those statements on Twitter knowing or having reason to know that they were false and misleading. After Musk initially rejected a settlement offer from the agency, which the SEC responded to by suing him, Tesla and its CEO accepted revised settlement agreements that are somewhat harsher. Tesla's board has drawn fire for being too deferential to Musk Under those agreements, which still have to be approved by a federal court, Tesla agreed to replace Musk with an independent chairman and to name two new independent directors. Tesla agreed to name a new chairman within 45 days of the settlement, and to name the new directors within 90 days. The agreements implicitly allow Musk to be involved in both of those sets of choices. They don't include any provision that would prohibit him from voting, as a director of Tesla, on its new chairman or its new directors. And they don't include any bar on him taking part in a shareholder vote on the new board members. The settlements also allow Tesla to name as its chairman one of its existing board members, rather than one of the new directors its been ordered to add. The company's current directors, which include Musk's brother, Kimbal, have come under repeated fire for being too deferential to and not adequately overseeing Musk. "The SEC stayed away [from] the broader corporate governance and management issues," Turner said. Also as part of the settlements, Musk and the company will each pay a $20 million fine to the SEC. However, in what could be seen as a win for shareholders, the agreements essentially require Musk and the company to pay the fines out of their own funds. Neither can ask that they be paid out of the company's insurance policies. Additionally, the agreement requires its board to create within 90 days a permanent committee comprised solely of independent directors that will oversee the implementation of the settlement SEC and set guidelines for top executives' communications with the public. The agreement also requires Tesla to hire or designate a securities law attorney to ensure that posts made by Musk and other executives to Twitter follow SEC disclosure rules. You can read the full settlement agreements below:<doc-sep>FILE PHOTO: James Murdoch walks off stage after a rehearsal for his James MacTaggert Memorial lecture as part of the Media Guardian Edinburgh International TV Festival in Edinburgh, Scotland, August 28, 2009. REUTERS/David Moir (Reuters) - Some Tesla directors have proposed that James Murdoch, fellow board member at the electric carmaker and chief executive officer of Twenty-First Century Fox Inc, succeed Elon Musk as its chairman, the New York Times reported on Tuesday, citing people involved in the board’s discussions. Murdoch hasn’t volunteered for the post nor has he discussed it with any other director, the newspaper reported. The board has not engaged in any “serious” discussions of who should be the chairman, the paper said, citing a source close to the selection process. The New York Times also said Musk had threatened to resign, in a phone call with directors, if the board insisted that he and the company enter into a settlement with the Securities and Exchange Commission (SEC). However, the next day, Tesla’s attorneys were back at the SEC requesting them for a second chance, this time with Musk’s ‘grudging approval’, the paper said. Tesla and Musk reached a settlement with regulators on Saturday, where they agreed to pay $20 million each to financial regulators and the billionaire will step down as chairman but remain as CEO. Reuters couldn’t reach out to Murdoch for comment. Tesla and Twenty-First Century Fox were not immediately available for comment outside regular business hours.<doc-sep>Bloomberg (Bloomberg) -- Credit Suisse Group AG executives ignored warnings from colleagues about troubled steel tycoon Sanjeev Gupta as they channeled $1.2 billion of client funds to his businesses, according to people familiar with the matter.Bankers in Credit Suisse’s commodity trade-finance unit blacklisted Gupta’s Liberty Commodities Ltd. in 2016 because they suspected some of its deals weren’t legitimate, the people said. When they learned about two years later that the bank was lending to his companies through a suite of investment funds, which eventually grew to $10 billion, they flagged their worries to leaders in compliance and the division that housed the loans, one of the people said.The disclosure that Credit Suisse may have put clients at risk despite internal concerns over Gupta’s businesses adds a new twist to the debacle stemming from the March implosion of Greensill Capital, the finance firm at the center of the three-way relationship.Investigations, LawsuitsThe U.K. Serious Fraud Office is now investigating Gupta’s group of companies for suspected fraud, including in its financing deals with Greensill, according to a May 14 statement. Credit Suisse has sued to force Gupta’s Liberty Commodities into insolvency and has since shut the funds that made the loans and launched an internal investigation. Investors are staring at losses as the bank confronts embarrassing lawsuits.“We are currently focusing our efforts on recovering our investors’ money,” Will Bowen, a spokesman for Credit Suisse in London, said in an emailed statement, adding that the bank’s internal probe will focus on “all of the issues” linked to the funds. “We are committed to learning the lessons and will share the relevant lessons learnt at the appropriate time.”Andrew Mitchell, a spokesman for the Gupta Family Group Alliance, or GFG Alliance, a collective of businesses linked to Gupta including Liberty Commodities, denied any wrongdoing.The Greensill saga represents just one of the two disasters that rocked Credit Suisse in the first half of 2021. Since Greensill began unraveling, the bank has announced a $5.5 billion hit from the blowup at Archegos Capital Management.ApologiesFormer Chairman Urs Rohner apologized to shareholders and his successor, Antonio Horta-Osorio, who arrived at the end of April, has promised a sweeping strategy review.Chief Executive Officer Thomas Gottstein, who was head of the division that oversaw trade finance, wasn’t aware of the internal concerns about Gupta that had prompted the bank to cut him off, according to a person familiar with the matter.Employees at the trade-finance unit, which lends money for the buying and selling of commodities, cut ties with Gupta in 2016 after becoming skeptical toward his Liberty Commodities, the people said. They distrusted the documents the company provided, triggering doubts about its transactions, they said. In one example reported by Bloomberg, the company had presented another bank with what seemed to be duplicate shipping receipts. A spokesman for Gupta has denied any wrongdoing.Banking TiesLiberty Commodities pledged assets to Credit Suisse as security for borrowings in 2013 but by early 2016, all such commitments had been extinguished, indicating that the financing relationship had ceased, U.K. Companies House filings show. And while Gupta’s company listed the Swiss bank as one of its lenders in its 2014 annual report, it didn’t in the following year’s report, which is dated May 2016, according to the filings.Their counterparts at other banks, including Macquarie Group Ltd. and Sberbank PJSC, halted trading with Liberty Commodities around the same time because of similar concerns; Goldman Sachs Group Inc. also stopped in 2016, Bloomberg has reported.Nevertheless, executives at Credit Suisse’s asset-management division -- which creates investment products for clients and charges a fee for overseeing them -- began arranging a suite of funds focused on supply-chain finance in 2017. The entities bought securitized loans packaged by Greensill, a firm created by Australian businessman Lex Greensill. Much of the debts were linked to Gupta’s businesses.WarningsOfficials at the commodity trade-finance unit were concerned when they found out about the funds’ links to Gupta and took their fears to Thomas Grotzer, general counsel for the bank’s Swiss division. They also warned Luc Mathys and Lukas Haas, the bankers who helped oversee the trades at the asset-management unit.Grotzer was promoted last month to interim global head of compliance at Credit Suisse. He didn’t respond to requests for comment. Mathys, head of fixed-income at the asset-management division, and Haas, a portfolio manager, were put on temporary leave in March. Neither responded to requests for comment.The bank pushed ahead with the funds and marketed them to investors as being made up of short-term debt secured on invoices, assets considered so safe that Credit Suisse gave the largest vehicle its lowest rating for risk. Yet part of the loans were linked to mere possible future revenues.Other parts of the bank continued working with Gupta as well. Credit Suisse’s investment bankers were due to lead an initial public offering for Liberty’s U.S. steel arm, which was ultimately pulled, according to a statement from the company. Gupta also announced that the Swiss bank would finance his planned acquisition of Thyssenkrupp AG’s steel unit, which fell apart earlier this year.Credit Suisse has so far recouped about $5.9 billion of the $10 billion in these supply-chain funds, but it remains unclear how much will be returned ultimately to investors. Loans to Gupta’s businesses are among a batch of debts that are the “principal sources of valuation uncertainty,” the bank said earlier this month.Liberty Commodities’s external legal advisors investigated “alleged rumors concerning the paperwork” it used in 2019, according to Mitchell, the spokesman for GFG Alliance. They found no evidence to substantiate the rumors, nor was the company “ever subject to further complaints or proceedings,” he said.“LCL has ongoing banking relationships with separate financial institutions,” Mitchell said, referring to Liberty Commodities. “The trade-finance market has been hugely challenging for all but the very largest commodities traders in recent years. Nevertheless, no financial institution has been left out of pocket as a result of lending money to LCL. On the contrary, they have received substantial commercial returns.”More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.<doc-sep>
Tesla rises despite revelations that founder and CEO Elon Musk threatened to leave the company if he was forced to settle fraud charges with the SEC. Tesla Inc. (TSLA) - Get Report shares fluctuated Wednesday morning following yet another set of negative headlines surrounding the clean-energy carmaker, including revelations that founder and CEO Elon Musk threatened to leave the group if he was forced to settle fraud charges with the Securities and Exchange Commission. The New York Times reported Tuesday that Musk first told Tesla's board that he would resign his position if he was made to accept the SEC's Sept. 28 charge that his now infamous "take private" Tweet from August 7 was fraudulent. However, in the wake of Tesla's 14% plunge the following day -- and the more than $6 billion in hived from the company's market value, Musk acquiesced to the SEC's demands and accepted a $20 million fine that was matched by an equal amount from Tesla itself. The paper also reported that some Tesla directors have proposed that James Murdoch, a director at the electric vehicle company and CEO of Twenty-First Century Fox Inc. (FOXA) - Get Report should succeed Musk as chairman. As part of the settlement with the SEC, Musk agreed to not serve as Tesla's chairman for three years. On Wednesday, Tesla shares opened slightly higher, but were declining 1.4% to $296.66 by late morning. Murdoch hasn't volunteered for the post nor has he discussed it with any other director, the paper said, while another person close to the selection process told the Times that the board hadn't yet engaged in any "serious" discussions of who should be chairman. The Times report comes amid news that a U.S. District Judge in San Jose said Tesla must defend two accusations that it violated forced labor laws and exploited foreign workers with long hours and low wages in order to meet its ambitious production targets. The ruling paves the way for a potential class action lawsuit that would add to the myriad legal actions already in place against the Palo Alto, Calf.-based company. Tesla did manage to capture some positive headline flow Tuesday when it said it produced 53,239 Model 3s over the third quarter, a substantial gain from 28,578 Model 3 output in the previous three months and within company forecasts of 50,000 to 55,000. Model 3 production hit 5,300 in the last week of the quarter, the company said, while deliveries of 55,840 Model 3s were slightly below expectations of 56,000. However, the group also warned the new tariffs on U.S. auto exports to China, which hit 40% over the summer amid the ongoing trade war between Washington and Beijing, would hammer sales in the world's biggest market for clean-energy vehicles. "Taking ocean transport costs and import tariffs into account, Tesla is now operating at a 55% to 60% cost disadvantage compared to the exact same car locally produced in China," the company said. Want to Buy $1 Worth of Stock for 90 Cents or Less? You can with certain so-called "closed-end" mutual funds - an often overlooked investment class. Click here to register for a free online video in which TheStreet's retirement expert Robert Powell and an all-star panel tell you all you need to know. The webinar is sponsored by Nuveen.