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| S.E.C. Goes After Musk With its ‘Ultimate’ Penalty. Here’s Who Else Has Been Banned. | S.E.C. Goes After Musk With its ‘Ultimate’ Penalty. Here’s Who Else Has Been Banned. |
| (35 minutes later) | |
| The Securities and Exchange Commission has accused Elon Musk, Tesla’s chief executive, of committing fraud when he said on Twitter: “Am considering taking Tesla private at $420. Funding secured.” The S.E.C. says Mr. Musk had not had specific conversations about financing when he made that announcement, and so his tweet amounted to a false public statement with the potential to harm investors. It is seeking to prevent Mr. Musk from ever serving as an officer or director of a public company again, which is the most serious penalty the regulator can seek. (Criminal charges, if any, would be brought by the Department of Justice in a separate case.) | The Securities and Exchange Commission has accused Elon Musk, Tesla’s chief executive, of committing fraud when he said on Twitter: “Am considering taking Tesla private at $420. Funding secured.” The S.E.C. says Mr. Musk had not had specific conversations about financing when he made that announcement, and so his tweet amounted to a false public statement with the potential to harm investors. It is seeking to prevent Mr. Musk from ever serving as an officer or director of a public company again, which is the most serious penalty the regulator can seek. (Criminal charges, if any, would be brought by the Department of Justice in a separate case.) |
| “They can seriously fine you, but the ultimate is to ban you from ever serving again,” said Charles M. Elson, a professor and director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “It’s not just retrospective, it’s prospective.” Mr. Musk isn’t the only executive to face this kind of sanction, but he certainly may be the highest profile. Here are some others who’ve been hit with this penalty, and why: | “They can seriously fine you, but the ultimate is to ban you from ever serving again,” said Charles M. Elson, a professor and director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “It’s not just retrospective, it’s prospective.” Mr. Musk isn’t the only executive to face this kind of sanction, but he certainly may be the highest profile. Here are some others who’ve been hit with this penalty, and why: |
| 10 Years | 10 Years |
| In March Ms. Holmes, the founder and chief executive of Theranos, and Ramesh Balwani, the former president of the company, were charged with raising more than $700 million from investors through “an elaborate, yearslong fraud in which they exaggerated or made false statements about the company’s technology, business and financial performance.” | In March Ms. Holmes, the founder and chief executive of Theranos, and Ramesh Balwani, the former president of the company, were charged with raising more than $700 million from investors through “an elaborate, yearslong fraud in which they exaggerated or made false statements about the company’s technology, business and financial performance.” |
| Ms. Holmes agreed to settle the fraud charges, paying a $500,000 penalty, returning her remaining shares and relinquishing voting control over Theranos. She was barred from serving as an officer or director at a public company for 10 years. | Ms. Holmes agreed to settle the fraud charges, paying a $500,000 penalty, returning her remaining shares and relinquishing voting control over Theranos. She was barred from serving as an officer or director at a public company for 10 years. |
| That’s not the end of the legal issues. Mr. Balwani has decided to fight the charges and they both face criminal charges. | That’s not the end of the legal issues. Mr. Balwani has decided to fight the charges and they both face criminal charges. |
| Permanent | Permanent |
| Mr. Gupta, who ran the consulting firm McKinsey, was sentenced to two years in prison for leaking boardroom secrets about Berkshire Hathaway’s investment in Goldman Sachs, as well as details about Goldman’s financial results. The recipients of those leaks, Raj Rajaratnam, the former head of Galleon Group, was sentenced to 11 years for insider trading, and was barred from association with any investment adviser, broker, dealer, municipal securities dealer or transfer agent, but had the right to apply for re-entry after five years. In 2013, Mr. Gupta was permanently barred from serving as an officer or director at a public company. | Mr. Gupta, who ran the consulting firm McKinsey, was sentenced to two years in prison for leaking boardroom secrets about Berkshire Hathaway’s investment in Goldman Sachs, as well as details about Goldman’s financial results. The recipients of those leaks, Raj Rajaratnam, the former head of Galleon Group, was sentenced to 11 years for insider trading, and was barred from association with any investment adviser, broker, dealer, municipal securities dealer or transfer agent, but had the right to apply for re-entry after five years. In 2013, Mr. Gupta was permanently barred from serving as an officer or director at a public company. |
| 5 Years | 5 Years |
| In 2006, Ms. Stewart settled civil insider-trading charges with the S.E.C., which contended that she illegally used nonpublic information when she sold 4,000 shares of a company called ImClone Systems. She paid $195,000 in fines and penalties and was barred from serving as director or chief executive of any public company for five years. This did not significantly curtail her corporate responsibilities at the time. | In 2006, Ms. Stewart settled civil insider-trading charges with the S.E.C., which contended that she illegally used nonpublic information when she sold 4,000 shares of a company called ImClone Systems. She paid $195,000 in fines and penalties and was barred from serving as director or chief executive of any public company for five years. This did not significantly curtail her corporate responsibilities at the time. |
| She had already been convicted in a criminal trial of obstructing investigation into her trading activities. | She had already been convicted in a criminal trial of obstructing investigation into her trading activities. |
| permanent | permanent |
| Mr. Skilling, the former chief executive of Enron, spearheaded a fraud that destroyed the energy giant in 2001 and ultimately sentenced to a 14-year prison term. He moved out of prison and into a halfway house last month. | |
| The S.E.C. sought financial penalties, the return of ill-gotten gains, an injunction from future violations of federal securities laws, and a permanent bar from being a director or officer at a publicly held company. | The S.E.C. sought financial penalties, the return of ill-gotten gains, an injunction from future violations of federal securities laws, and a permanent bar from being a director or officer at a publicly held company. |
| The civil claims brought in 2004 were stayed as criminal proceedings were concluded. In 2015, the S.E.C. obtained a summary judgment, barring Mr. Skilling from ever serving as an officer or director at a publicly held company. | The civil claims brought in 2004 were stayed as criminal proceedings were concluded. In 2015, the S.E.C. obtained a summary judgment, barring Mr. Skilling from ever serving as an officer or director at a publicly held company. |
| It sought a similar punishment for Kenneth L. Lay, the former chairman and chief executive of Enron. Mr. Lay died in 2006 while waiting for his criminal sentence and a judge voided his conviction because he could not appeal his guilty verdict. | It sought a similar punishment for Kenneth L. Lay, the former chairman and chief executive of Enron. Mr. Lay died in 2006 while waiting for his criminal sentence and a judge voided his conviction because he could not appeal his guilty verdict. |