Tesla, Inc. is an American company that designs and manufactures fully electric automobiles and energy storage systems for use in homes and commercial sites. Tesla, Inc. is a part of both the electric industry and most importantly the automobile industry. Elon Musk, the Founder and CEO of Tesla, Inc. issued a statement via Twitter that damaged the Tesla brand ad his name. On August seventh of 2018, Elon Musk tweeted that he was considering taking Tesla private at four hundred twenty dollars with secured funding.
In tweeting this information, Musk violated securities regulations by not informing the investors of his decision. In return this gave an advantage to those that follow him on social media to buy into the stock, therefore making it an unfair advantage to those that do not follow Elon Musk on social media. In addition, regardless of his intentions of the tweet, when considering he most likely did not have the financial backing for this decision, he made a false statement.
In lieu of Elon’s actions, the Securities Exchange Commission has gotten involved to protect the investors and maintain fair securities within the Tesla, Inc. market. To begin with, the Securities Exchange Commission negotiated a deal with Elon Musk and his lawyers agreeing that Mr. Musk would step down as chairman within forty-five days of posting on Twitter. According to the New York Times article, Elon Musk walked away from the deal shortly after. In return, the agency took action to sue Elon Musk in an effort to remove him from serving as an executive of a public company.
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The Securities Exchange Commission set a court date of February 1, 2018. Elon Musk’s irrational behavior has potentially cost him his position as CEO and chairman of Tesla, Inc. Not to mention, now that the Securities Exchange Commission has decided to drop any charges against the company itself and is now only suing Elon Musk, he will most likely face millions of dollars in fines.
Unfortunately, because Elon Musk made this poor decision without consulting with the rest of the board or the investors, the brand will suffer as well. Musk is not the only one affected by this situation. The investors will take a hit, it damaged the brand name, and it could cost the company a great deal of money to hire lawyers to protect the company from experiencing and repercussions from his actions. The article does not state exactly what steps the Securities Exchange Commission and Tesla, Inc plan to take in the future to prevent this issue from happening again. However, removing Elon Musk from the executive position he is in seems to be one way of preventing him from sabotaging the company in the future. Additionally, suing Elon Musk can help deter others from making decisions such as the decisions he made. In Elon suffering the repercussions of his actions, surely there will be rules and regulations set into place for future executives and stakeholders to prevent this issue from happening again.
My Opinions of the Recent Compliance Problem and Enforcement Action
The article “Tesla’s Elon Musk Had a Deal from the S.E.C. It fell Apart in a Morning” gives a prime example of non-compliance. Elon Musk violated the securities law when he tweeted about having funding secured to take Tesla private for 420 a share. The securities law essentially protects those that invest in any person that invests in a public company. The securities law requires board members to disclose any information regarding decisions that potentially affect the investors involved with the company. Elon Musk’s irrational behavior has cost him his career and the company he founded. Who knows why he tweeted this. There are speculations that he posted this and chose the number 420 because it represents the national marijuana day on April twentieth. These speculations are due to the fact that he was recently recorded as being interviewed on the Joe Rogan Experience podcast. Regardless of his intentions, he did not consider the potential repercussions before posting this tweet. Elon Musk hasn’t made the smartest decisions when it comes to Tesla, Inc.
The company is apparently in billions of dollars of debt and additionally having a hard time keeping up with the production of vehicles. From these examples alone Tesla, Inc. could potentially benefit from Elon Musk stepping down as CEO and chairman on the board. It could hurt the brand because he is the face of the company and so many people admire him and his work but when you are looking at the situation as a whole, it could be the best decision for the company. Removing Elon Musk from Tesla, Inc. could allow the company to almost rebrand itself and change the course of the company. The S.E.C. originally planned on suing both Elon Musk and Tesla, Inc. when the allegations first arose. However, when Elon Musk walked away from the Security Exchange Commission’s deal, they decided to drop the charges towards Tesla and only sue Elon. Considering Tesla had nothing to do with the issue, I think this was a wise decision.
There is no sense in punishing the company when Elon Musk was the only one involved in the wrongdoing. The company will suffer from his actions regardless of what happens with the S.E.C. Since this tweet was published, Tesla’s shares have taken a huge hit. Investors are having a hard time trusting in the company with Elon on the board. His unorganized approach to compliance is costing the company a great deal of loss in the industry. Moving forward, the best bet for the company will be to make some changes in the way things are being done. Mr. Musk violated all three of the GRC terms when he decided to post what he did on Twitter. He showed a lack of governance because he did not show good hierarchal management control. When he chose to tweet that information, he basically went behind other executives’ back in making that executive decision. There were a lot of steps to be taken before he should have ever considered taking Tesla, Inc. private.
He also showed a lack of risk management. Before posting on Twitter he didn’t consider who and what all would be affected by his actions. Investors were affected by his actions, the board, the other executives, and surely multiple others were affected by his decision. It is important to have smart risk management because of how much it can potentially affect the company and create a snowball effect for many other issues. Lastly, Elon musk was not compliant in his actions. First and foremost, he broke the law in that he did not discuss with his investors his plan to take Tesla, Inc. private. He most likely violated contracts within the company. Being in compliance with a corporation, or any business for that matter is important for the business to run properly. When an executive doesn’t follow the compliance of a company, it can do a great deal of damage to the name, the operations of the company, and it can also personally affect many individuals involved in the company.
My opinions of the Role of Compliance in Business
A. GRC is Governance, Risk management, and Compliance within corporations and businesses. Prior to this assignment, I was unaware of the meaning of GRC. Through reading the articles I’ve learned the importance of governance, risk management, and compliance. Governance is crucial to implement guidelines for the employees. Creating guidelines goes far beyond setting rules for the employees. Governance can also include regulations on how to use equipment, dress code, attendance, fraud, and sick and personal day policies. Without these regulations and good communication implementing these regulations, a company could potentially fall apart. A clear understanding of the company’s guidelines and regulations, it allows for a much more functional environment for everyone. Risk management plays a large role in the functionality of a business because of the liabilities that are associated with risks. It is important for companies to protect their assets to reduce the potential loss when risks of losing assets are high.
Compliance has started to veer towards becoming its own industry because of the dynamic role it plays in the workplace. I was unaware that compliance has evolved into its own industry prior to the readings. After reading the articles, it makes complete sense that corporations would be following this transition. A great deal of compliance has to deal with regulations in the workplace as well as state and local regulations. It is crucial for businesses to follow these regulations because of the lawsuit that could occur from not doing so. Having a team that specifically handles these situations helps prevent lawsuits from happening. I believe every business could benefit from having a specific person or group of people that specialize in that field they can have the most successful outcomes for their business.
Compliance specialist at Dia Global solutions pays anywhere between 41,000 and 66,000. Compliance Reporting Executive at Macquarie Group pays between 96,000 and 172,000. Manager, Talent Acquisition and Compliance at Powell Industries pay between 84,000 and 153,000. Lastly, Compliance Analyst at CITGO Petroleum Corporation pays between 47,000 and 65,000. I believe these jobs pay well because of the importance to the company’s overall functionality. A compliance position helps to maintain compliance across the entire board. Companies are becoming smarter about the best ways to maintain a healthy company. This position does not necessarily intrigue me. I respect the position and think it is a defining factor of organizations, but it is not something I would want to take on in a career. I have more of an interest in finance rather than the legalities of a business. Finance and compliance do go hand and hand, so it is something I will be aware of in my future career. I will have to be in compliance with tax laws, internal audits, and policy changes. In addition, I will have to meet deadlines for certain payments required in that position.
D. Just because a job does not state ‘compliance’ in the job description, does not mean that it is not expected of you. I would say all jobs expect you to be in compliance of their rules and regulations upon getting hired for the position. In which case, someone does not follow the rules and regulations, that someone will most likely get fired. I believe in every company; every individual is responsible for being compliant. A company would not function properly if only a hand full of people were responsible for being compliant. I do, however, believe that some are expected to have more responsibilities therefore be more “compliant” than others. For example, a cashier is responsible for handling petty cash and transactions at a cash register. It is their responsibility to handle the cash responsibly and not commit theft.
On the other hand, a financial controller is responsible for all cash flow going in and out of the company, they have a greater responsibility because they are liable for a larger amount of money if something were to happen. In conclusion, every individual is responsible for being compliant in their position. Compliance in the workplace has the potential to greatly expand in the next five to ten years. With the growth of technology and higher risks within the workplace, more actions need to be taken to assure everything is being done to meet the regulations within that company, locally, and federally.
Recent Compliance Problem and Enforcement Action. (2021, Dec 11). Retrieved from https://paperap.com/recent-compliance-problem-and-enforcement-action/
