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>“I thought about what are the problems that are most likely to affect the future of the world or future of humanity.” Elon Musk, a South African-born engineer, inventor and billionaire, is one of the most important entrepreneurs in the world. But the 47-year-old is no stranger to turmoil, and by his own account his career has been full of highs and lows. “Just three years ago, I was showering at the Y and sleeping on the office floor. And now, I have got a million-dollar car and quite a few creature comforts.” After making a fortune with his first successful startup, Zip2, Musk gained fame as the co-founder of PayPal in the late 1990s. “So this is an ATM. What we’re going to do is transform the traditional banking industry.” The company lost hundreds of millions of dollars, and Musk was ousted as CEO because of internal turmoil. But when PayPal went public in 2002, and then was sold to eBay, Musk — as the biggest shareholder — walked away with $200 million. By the mid-2000s, Musk had turned around and invested almost all of his PayPal fortune into his new companies: SpaceX, Tesla and SolarCity. With SpaceX, Musk’s aspiration is out of this world — literally. It’s a commercial space flight company, which designs and launches advanced rockets into space. “Behind me is where Falcon 9 would sit during launch.” One of its ambitions is to eventually send people to Mars. “And I can’t think of anything more exciting than going out there and being among the stars.” But it has faced some roadblocks. Their first three rocket launches — failed, burning through almost all of the company’s assets. But SpaceX has had recent successes. The Falcon Heavy launch earlier this year was a big milestone and it carried an interesting payload: a dummy astronaut riding a Tesla car that was orbiting space. The company has also landed contracts with NASA, but questions about safety and cost remain. “We sold over 1,000 cars — and by sold I mean people put down a substantial deposit on the car.” Tesla, Musk’s electric car company, is one of the first of its kind to work on a large scale. It has also successfully disrupted the auto industry. The company is valued at over $50 billion. The Tesla Model S has been called the greatest car ever built. But Tesla has also faced some setbacks, including car batteries that caught on fire, recalls and production delays. SolarCity, Musk’s renewable energy venture, initially had a bright future. It’s the largest provider of rooftop solar systems in the U.S., and the company boomed on Wall Street. But after investors raised doubts about its business model, SolarCity’s shares quickly lost value, and Tesla had to take over in what was widely seen as a bailout. “We really need to make solar panels as appealing as electric cars have become.” But while Musk may have been flirting with bankruptcy and calamity for years, his projects continue to captivate the collective imagination. “Life has to be more than about solving problems. There have to be things that make you proud to be a member of humanity.”<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 CEO Elon Musk at a press conference at the Nevada State Capitol in Carson City, Nevada, in 2014. Photo : Max Whittaker ( Getty Images ) In August, Tesla CEO Elon Musk set off an entirely preventable and catastrophic chain of events by tweeting that he was “considering taking Tesla private at $420. Funding secured.” Musk provided no financing details, and the Securities and Exchange Commission later determined that he never finalized any kind of deal with the Saudi sovereign wealth fund behind the ostensible buyout. Last week, it slapped him with fraud charges for making “false and misleading” statements and not complying with regulatory requirements. Musk and the company’s board initially appeared to be digging in for a battle, but per the Washington Post, on Saturday he caved. Musk has agreed to a settlement in which both he and Tesla will pay out separate $20 million fines, and Musk will step down as Tesla’s chairman for at least three years. The only silver lining is that Musk will be allowed to remain the company’s CEO, the Post wrote: Tesla chief executive Elon Musk agreed on Saturday to pay a $20 million fine and step down as board chairman as part of a settlement with the Securities and Exchange Commission. Tesla will separately pay another $20 million and agreed to add two new independent directors to its board and monitor the billionaire’s public communications more closely... Under the settlement, Musk will resign as chairman of the automaker within 45 days and be barred from that position for three years. But he will remain Tesla’s CEO and does not have to admit wrongdoing as part of the deal. In a statement, the SEC wrote: The SEC also today charged Tesla with failing to have required disclosure controls and procedures relating to Musk’s tweets, a charge that Tesla has agreed to settle. The settlements, which are subject to court approval, will result in comprehensive corporate governance and other reforms at Tesla—including Musk’s removal as Chairman of the Tesla board—and the payment by Musk and Tesla of financial penalties. This is a massive humbling for Musk, who in recent months has seen a number of bizarre and mostly self-inflicted controversies over everything from a defamation lawsuit brought by a Thai cave rescuer he baselessly accused of pedophilia to allegations of drug use and a New York Times interview in which he was described as alternating “between laughter and tears.” In the meantime, a number of top Tesla executives have left the company and a National Labor Relations Board investigation into practices at its Fremont, California production facility has continued to gain steam. Removal as chairman of the board will introduce significant limits on Musk’s ability to unilaterally exert power over the company. It’s also humiliating because the SEC alleged in the suit that Musk chose the number 420 specifically to impress his (possibly ex-) girlfriend, the musician Grimes: According to Musk, he calculated the $420 price per share based on a 20% premium over that day’s closing share price because he thought 20% was a “standard premium” in going-private transactions. This calculation resulted in a price of $419, and Musk stated that he rounded the price up to $420 because he had recently learned about the number’s significance in marijuana culture and thought his girlfriend “would find it funny, which admittedly is not a great reason to pick a price.” According to CNBC, Tesla stocks on Nasdaq had already “closed down around 14 percent on Friday at $264 per share.” However, it could have been worse: Without a settlement, the SEC would have sought to have Musk “be prohibited from acting as an officer or director” of a public company. As CEO, he will remain in charge of Tesla’s day to day operations, and the company hasn’t lost a founder widely viewed as a visionary critical to its future. As the New York Times noted on Friday, if Musk had refused to accept a settlement the matter could have dragged on for years. Correction: A previous headline for this article incorrectly indicated that Musk had resigned as Tesla’s chairman. He has agreed to resign within 45 days, but has not yet formally done so. We regret the error. [Washington Post]